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Incomplete Records - What could Happen?

What to do if some bank statements are missing

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A client cannot provide last 2 months bank statements as he closed the account.

He tried to contact the bank many times but they refuse to help, he has all communication on record.

He gave me the approximate closing balance.

I have all the sales and expenses invoices.

What should I do in this situation and what could HMRC/Companies House do if the accounts are incomplete?

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By SXGuy
29th Sep 2020 19:24

Companies House, nothing.
Hmrc who knows. You could always state its an estimate.

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By Matrix
29th Sep 2020 21:28

Where would you state it?

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By lionofludesch
29th Sep 2020 23:14

Where the tax return asks if you've used estimates.

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By Matrix
30th Sep 2020 06:32

And you would do that in this case? I wouldn’t.

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By SXGuy
30th Sep 2020 07:17

I've never had this issue so unsure what I'd do at this stage. Wouldn't say it's provisional if statements will never turn up.

What would you do?

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By Matrix
30th Sep 2020 07:26

Well I didn’t even know there was such a box!!

I have never submitted an estimated return and wouldn’t want to submit such a return as agent.

I don’t really get though how you could submit accounts to CH but tick a box on the CT600 to disclaim that they are correct.

I expect I would do everything to get comfortable with the accounts and so get copies of the statements per my post below.

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By Finding Accounting
30th Sep 2020 11:19

The estimate is only the balance sheet really.

If he has provided all invoices and receipts I would assume corporation tax wouldn't be affected?

Its a shame the isn't a box where we could explain the matter in more detail as there is in the personal tax return.

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By whitevanman
29th Sep 2020 20:30

If the client has good records including all purchase / sales / expense invoices, it should not be necessary to use estimates.
It would not matter what HMRC do because the financial statements and any tax return based on them would be "correct" (all other things being equal).
HMRC could, for whatever reasons, open an enquiry into a return and as part of that enquiry would be likely to require sight of bank statements. At that stage it is likely that one would take the view that the missing statements are within the client's "power", that is to say, the client could pay the bank and they would provide copy statements. Failure to comply with a statutory notice could then render the client liable to penalties (unless there was a very good reason that the Tribunal felt justified the failure).

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By SXGuy
30th Sep 2020 07:19

Op already stated bank closed the account and can't provide copy statements so its not within clients power to obtain them..

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By gillybean04
30th Sep 2020 10:12

If it's not for a limited company then a subject access request for the desired information would yield results and be within the client's power.

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By RaxJ
29th Sep 2020 20:41

Try to reconcile the closing balance working backwards. Work with him to identify the main sales and purchases made in that period. You should be able to identify recurring direct debits/standing orders etc. When preparing the final year end accounts, in the letter of representation, state that the year end bank balance is an estimate due to missing bank statements. Get client to sign it.

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By Paul Crowley
29th Sep 2020 20:48

This is one reason why I say to all clients, do what you like electronically, but still get paper statements, put them on a treasury tag upon arrival and write on the statement when you get it.
At that point you know what everything was.
This will not be a high street bank

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By Matrix
29th Sep 2020 21:20

Ask him again. He must have transferred the closing balance to another bank account as it doesn’t sound like the kind of bank where you withdraw it all in a branch.

Tell him that the construction of the incomplete records will take longer and cost more and that any unsubstantiated differences will be booked to the Director loan account. Maybe he will find something to give you or pay the bank for this.

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By Paul Crowley
29th Sep 2020 22:20

That would be the right answer
Banks are not in any position the refuse the request, but can charge what they want to comply.
I would have thought Money institutions were the same.
I would not believe the clients version of events.

It is Anon so OP could Edit question identify the institution that appears to be breaking the rules.

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By SWAccountant
30th Sep 2020 12:54

Talking of accounts, why doesn't the Op make one?

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