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New client - Directors remuneration journal help

Directors Remuneration journal 2016/2017 query

Hi All

I have just started working with a new client. Firstly i have found so many issues however one that is bothering me is a year end journal 31/07/2017. This seems to have been put through as they had not taken hardly any money in wages at the year end.

DR Directors Remuuneration   £23000

CR PAYE & NIC                                  £800.64

CR DLA Director 1                                £11099.98

CR DLA Director 2                               £11099.98

The directors don't actually take the money put transfer everything to their personal DLA's and spend from the business.

The issue i have is then in Dec 17 - March 18 there has been payroll processed for £23k and RTI's submitted to HMRC with the value of £11099.98 to each DLA account so could this be double counting?

How would you guys deal with this? 

Any help would be appreciated?

Kind Regards

 

Replies

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26th Mar 2019 22:38

What you have illustrated does not prove double counting as far as I can see. Do you have proof?

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By learose
to andy.partridge
26th Mar 2019 22:48

On the 31/07/2017 there is a journal as shown above.

Then Dec - March DLA 1 (4 entries) totalling £11,099.68

Dec - March DLA 2 (4 entries) totalling £11,099.68

We also have 2 additional journals processed in Dec/Jan which are reversing out £2611.60 from each DLA account.

Does that explain it better?

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By Matrix
27th Mar 2019 06:46

Wouldn't the second lot of journals be for 2017/18 payroll?

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27th Mar 2019 08:45

The credits in the jnl should have been to accruals - it would then have made sense to you.

(Assuming the Dec - Mar payroll wasn’t actually paid), you need to just reverse the YE jnl over the Dec - Mar period.

Net affect is that the 2017 YE jnl was brought the £23k into the P&L, the payroll ensured that it was deductible in 2017, DLAs have reduced by the c£11k.

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By learose
to atleastisoundknowledgable...
27th Mar 2019 11:35

I have been having a look this morning and you are correct - had the journals been to accruals this would have made sense.

I have never seen it done this way and couldn't understand for the life of me last night what they had done.

The Dec - March payroll had been posted to DLA accounts and directors have thought this was available! However i can deal with that...

I will process these journals, however i have one question by doing this it will show the directors remuneration account to be at zero due to the adjustments made for 2018 at July YE? Does that mean i am going to have to make another provision?

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By DJKL
to learose
27th Mar 2019 12:11

Re year ending 31 July 2018, you cannot really make a journal entry as at 31 July 2018 in the accounts to 31 July 2018 if there was no obligation as at 31 July 2018 for the company to pay salaries to the directors at that date for the year then finishing.

This is one of these time machine issues.

I would ensure personal allowances have been used for 2018/2019 by possibly processing RTI payrolls this month, but not convinced these salaries relate to the accounts for ye 31 July 2018

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