Advice Required (again!)

bloobuoy75

I have a client who has an interesting tale. He had a Ltd. company with his wife. They were equal share holders. One day she decided she didn’t want to be married anymore so cleared the shop of the stock, resigned as a director and setup herself up as a new company. The husband (my client) was left with a company (named after her) and a premises with no stock.

He’s eventually got himself back on his feet and setup a new company. Unfortunately the bookkeeping for the old company has a few gaps and he had a disagreement with his previous accountant which is when I came on to the scene.

The previous accountant has done accounts and corporation tax up to the end of 2006. The old company failed to complete any returns since then it has subsequently been struck off the register by Companies House.

As I said the bookkeeping is pretty poor and it’s not proved easy to put together 3 sets of accounts (there is foreign Currency and a private bank account in her name being used).

I know I don’t have to submit anything to Companies House, but I do need to work out the Corporation Tax Liability. However my client has been putting all the costs through the old company and taken all the income in the new company. How should I handle this? I’m just concerned that the old company will show a big loss and the new company will show a big profit and he'll end up with a big tax bill. Do I recharge costs paid by the old company to the new company? All the old assets and liabilities have been taken on by the new company and need transferring aswell.

Bluewednesday

If the old company has been struck off why are you doing returns for it?

groundy

I though the exact same thing. There is no need to prepare the accounts as the company no longer exists.

Aaron C Rescue

bloobuoy75 wrote: »

However my client has been putting all the costs through the old company and taken all the income in the new company. How should I handle this?

This is fraudulent on so many levels, no wonder he had a row with his previous accountant. You need to hand him his books back and report him to the AAT and the Tax man.

bloobuoy75

Just to clarify the situation I don’t think he has been intentionally fraudulent (I know innocence is no excuse. He has been totally left in the cart (so to speak). I’m just trying to help the guy get back on his feet!

The last Accountant did Accounts up to 31/12/06. The old company was dissolved in the middle of 2009. The new company wasn't setup until early 2009. The client said that the Revenue has been chasing for his Corporation Tax for 07 and 08. Is this now irrelevant now that the company has been dissolved?

My thoughts were to prepare accounts for 07 and 08, then completion accounts in ’09 and transfer the assets and liabilities to the new company. If I don’t do that then how will I have a starting position for his new company? Or am I barking up the wrong tree?

If there is a better option then please let me know.

groundy

If the companies have been dissolved then there is no requirement to complete accounts. If there is no company then who will pay the tax ?

bloobuoy75

Sorry me again,

So we've shelved the books for the old company and are now bringing the new companies accounts up to date.

However my client is receiving fines from HMRC and being threatened with legal proceedings. If he tells them that the company has been dissolved will they leave him alone?

deanshepherd

Yes (unless he acted fraudulently).

Monsoon

Agree, HMRC can't chase a company that doesn't exist. and as Dean says, they will only chase the director personally if he acted wrongly (there's a specific word I'm looking for that isn't fraudulent but I can't think of it!).

As an aside, HMRC are cr@p at objecting to companies being struck off. We noticed two today, where a company had applied to be struck off, and HMRC didn't object, even though they knew the company was active for Corporation Tax.