Owner/Directors only "customers"

Is a Ltd company trading with its owner/director mutual?

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I recognise the Ltd company is a separate entity. I am looking at a bizarre set of previous year's accounts for a potential Limited (by shares) Company client wherein the Limited Company was set up solely to develop a piece of land belonging to the owner/directors. According to the accounts prepared by the previous accountants ownership of the land was not transferred (No fixed assets) and yet despite the company incurring considerable expense there are neither Turnover or Cost of Sales on the P&L

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paddle steamer
By DJKL
15th Sep 2017 19:21

Surely the land would go to stock, not fixed assets, if it was acquired for development, anything in stock and WIP?

Could/is the company acting within a JV role with the landowners, is there some documentation?

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By Pygmy
18th Sep 2017 08:20

No stock or work in progress Only debtors,creditors and money in bank - I am still trying to get sight of deeds for land. The client has described the problem as straightforward on several occasions so I know it isn't

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Replying to Pygmy:
paddle steamer
By DJKL
18th Sep 2017 09:28

Even if land not transferred is there JV documentation that was executed between the parties. Until you have the facts/paperwork it will be impossible to understand what is happening; is it by design or an almighty **** up.

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RLI
By lionofludesch
18th Sep 2017 09:40

"According to the accounts prepared by the previous accountants ownership of the land was not transferred (No fixed assets) and yet despite the company incurring considerable expense there are neither Turnover or Cost of Sales on the P&L"

I've had the same issue for a couple of years with a company developing a property. No turnover, no cost of sales is probably correct. All the expenditure - bar some admin expense - is stock or work in progress.

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By Justin Bryant
18th Sep 2017 11:00

I think SDLT is the main potential problem issue here. You will need to speak to an SDLT specialist to avoid SDLT for the company (assuming it's over the relevant SDLT value threshold).

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