I have a client who has a limited company which held a number of properties. Over the past year or so some of these properties have been settled into three trusts. All the income from these properties have been paid into the limited company bank account eventhough there has been no trust bank accounts set up. The limited company accounts have posted all the income in respect of properties placed into a trust loan account on the balance sheet of the limited company. I presume that when I prepare the accounts for the trust I bring the income in on a receivable basis irrespective of the fact that there are no bank accounts in existence for the trust until very recently.
I was told by a solicitor that I should adopt a receipt basis and put in nil trust returns as no money has been paid into trust bank accounts. What do other people think?