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Do I have to account for small historic balances?

I am helping a friend with Y/E, he has 3 years worth of trivial unaccounted transactions...

Things like interest, bank charges, we're talking less than £20 a month. His Y/E is for 30 Sept 2017 but his bank account did not have a zero balance as at 1 Oct 2016.

My friend has made some bad business decisions and I'm trying to work through it (I expect to post more than one question on this to get to the bottom of it). He opened a bank account for an app development company but didn't really use it. Now he started a second company but used the same bank account (idiot!).

My question is... are HMRC going to give me grief for just inputting opening balances. The current business actually didn't start trading until November 2017 (two months after the Y/E date). I keep asking him for the original bank statement (the one that says ZERO) but his bank keeps neglecting to send these historic statements.

Unfortunately, his Y/E is due and I need to send it off to avoid fines. Any advice would be really appreciated!


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16th Jul 2018 18:16

Extra info - The opening balance is £9.25 CR, on 15th July 2016, not very significant in my opinion, but HMRC might disagree :)

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16th Jul 2018 18:31

The trouble with "muddling through" friends figures is they tend to do neither your or your friend any favours if you don't know what you are doing and your friend is relying on your for cheap/free help.

I am baffled for one why you are submitting accounts to HMRC for a period two month prior to trading commenced.

HMRC are in the business of collecting taxes. If your friend has a ridiculously small loss making small business (I assume its loss making if its App dev) which isn't going to carry on, then filing accounts is about the last thing you want to do.

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to ireallyshouldknowthisbut
16th Jul 2018 18:45

No return to HMRC is required for a period in which there's no trading.

If trading started part way through a CoHo period, HMRC still only require figures for the period in which the trade took place.

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16th Jul 2018 18:54

Well he's not really a friend, he's my father's ex-colleague. I'm also a small business owner in a different field, I have a finance background so I know what I'm doing, provided everything is above board and done properly.

As my client has no experience in money management with regards to accounting for a Ltd company, it's a bit of a mess.

One day I may say to him that he needs to get help from a professional, there's some real issues with regards to paying employees without a payroll but I'll cross that bridge when I come to it.

Going forward I will probably contact HMRC and tell them that actual trading didn't start till after the accounting period and see if they will change it.

Yes, it will be a loss. He is also not making profit with the contractor business but he is turning over a significant amount.

Thank you for your responses, I am sure I will be back on here with another clanger soon

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to ProffWoff
16th Jul 2018 20:06

ProffWoff wrote:

One day I may say to him that he needs to get help from a professional,

Can I suggest you make that day tomorrow?

If he is relying on you and you (a non-professional) are relying on us, this is going to end in tears (and they won't be ours...)

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By Matrix
16th Jul 2018 21:15

File dormant accounts to Sept 2017, which are already late. The fine is more than my fees for filing dormant accounts. He has plenty of time to engage a professional before the next set are due and to open up a bank account and to do things properly to save on fees.

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