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Ltd using llp bank account

Client doesn’t want to open new account

A client (2 individuals) is moving from LLP to Ltd, but doesn’t want to get a new bank account due to it being “a fair bit of work and admin”. 

If a company was using the director’s bank account, it would be classed as a DLA with s455 issues if relevant. Am I right in saying that the same would be true of a LLP bank account?

I presume that banks won’t allow a change from LLP to Ltd as it’s a different entity?

 Thanks 

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16th Apr 2018 22:55

Yes you will have to account for the balance in the account as a loan to the two individuals (or as a loan from them if the account is overdrawn).

I am aware of no reason to assume that the LLP’s bank would not open an account for the company, but that seems to be academic as you say your clients can’t be bothered to ask them to.

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to johngroganjga
16th Apr 2018 23:27

Thanks John. I’ll try harder at making them put in the effort of opening a new account!

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17th Apr 2018 06:25

IF the bank knows they will refuse to change the name of the account.
You could continue to use the LLP bank account through the LLP, but this will mean continuing the existence of the llp in perpetuity.

Otherwise just open a new account for the ltd, using the same bank as the existing one - it will still be a massive ball-ache as your (foreign-origin) client anticipates.

Using an account in a directors name is unwise if this is a proper trader, and exposes the individual to personal liability risk were anything to go wrong in future.

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to abelljms
17th Apr 2018 06:52

@abeljms
“You could continue to use the LLP bank account through the LLP, but this will mean continuing the existence of the llp in perpetuity.”
But won’t this raise s455 issues if the account is always ‘owed’ by the directors to the company?

“ it will still be a massive ball-ache as your (foreign-origin) client anticipates.”

They aren’t foreign, just don’t want to open a new account!

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18th Apr 2018 12:06

The one-off, short-term administration required to open a new bank account in the name of the company is nothing compared to the horrendous, permanently on-going administrative and accounting headaches inherent when a company does not transact via its own bank account. As the shareholders of the new company are already clients of the bank (via their LLP), they will not need further KYC/AML checks by the bank (beyond the most basic), so it shouldn't take too long, unless there are other issues that you have not made us aware of (or of which you yourself are not aware). I would advise them in the strongest terms that they would be most foolish to use the LLP bank account for newco's banking.

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to charliecarne
18th Apr 2018 12:47

Preaching to the converted my friend.

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18th Apr 2018 14:16

Just tell them it will cost more in accounting fees if they don't get a new Ltd bank account. Sense might prevail.

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18th Apr 2018 17:31

The client claims it's a "fair bit of work and admin".

If he wanted to save "work and admin", he should've stuck with being an LLP.

Having made that decision to become a limited company, he's stuck with all the "work and admin", not just the bits he fancies.

Has he heard of something called "Money Laundering" ?
This is the company's money that the LLP is appropriating.

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