Previous Owner has gone AWOL!

Emrhino

Hi all,

Not sure how to handle this one...I have had a call from a potential new client who, as well as just starting up his own transport business (fairly straight forward) has just taken over his daughter's beauty salon.

Now, his daughter has simply 'done a runner' to another city, allegedly leaving him to run the business.

He has asked me to come and take over all payroll, VAT, accounting, tax issues etc but he has no idea where she stood re accounts and tax returns as she is not speaking to him and he has no way of contacting her.

I would have said the business still belonged to her - he doesn't know what to do and just wants to make sure he complies and she doesn't get into trouble.

He has registered as being self employed from September 2010 and has changed the name of the salon in her absence to try to start afresh.

Any suggestions?!! I can probably work out the payroll situation etc from records in his office but to start producing accounts/tax returns etc from this date is a bit strange, surely?

There has effectively been no purchase of the business it has just fallen on him to run it - but he is now claiming the income from it.

Really stumped on this one!!

Monsoon

Firstly don't take over the vat number or payroll scheme - he needs to get new ones in his name. Don't want to take on potential liabilities from the past!

Treat it as a brand new business, bring in any assets at net book value if you know it or market value. He has acquired a business for free, by the sounds of it - though what makes him feel obliged to take it on I don't know - is he a guarantor on the lease or something?

Something about this is screaming limited liability here, might want to look at being a ltd co just for safetys sake...

As for her, her tax affairs are separate and are her business. He should treat it as new.

That's just my take on it....

wildgoose1uk

I agree with Monsoon. There is likely a reason she has taken off like this and it could be to do with stress over debts.

It is not expensive to create a ltd company although it is a little more onerous with annual accounts etc but worth it for the limited liability.

It is worth clarifying what insurances he needs also and what the agreements are with the staff he will take on. I know that in many hairdressers they are self employed and a cut of their takings goes to the salon. do they have their own insurance or does the salon need insurance if a client ends up with orange spiky hair instead of purple spiky hair?

Also nee dot check the lease on the property and see if it can be transferred into his name. I suspect that will not be a problem if the alternative is for the Landlord to chase the daughter for the rent!

Emrhino

Thank you both for your comments. I think you are right about starting completely from scratch re payroll - he has already registered for VAT in is own name so he should be able to transfer this to a ltd co. if he goes down that route.

Good points about insurance as well - I bet he hasn't thought of that.

As far as the rent goes, he is already paying the rent - he was subletting the units to his daughter(?!!) so that's easy enough to sort out.

Think it's another case of someone just thinking they can say 'I'm going to work for myself from today' and thinking that's all there is to it!

Anyway, I sent him a quote to help sort everything out and he hasn't got back to me yet - probably wondering if it's worth the cost and the hasssle!

Your thoughts are much appreciated, thanks again.

A-Vic

Hi re payroll i would chance it over as soon as possible due too any P30 payments not received will be left outstanding and later could end up a right mess, i would issue a P45 for the current employees and start them under the new name.

Guest

I wouldn't issue a P45 as not acting for daugher, complete P46

A-Vic

Guest wrote: »

I wouldn't issue a P45 as not acting for daugher, complete P46

But the payroll is still live so when the change over from one name to another it will be a brand new PAYE code if they have access to current payroll details and can run it to the date he officailly took over and re-registered saves time and paperwork?

And he will need to re-regisiter and cancel the previous payroll by letter

Guest

So where is the engagement coming from to complete P45s for Daughter? Must consider MLR, CDD, PII etc.. If Daughter has 'done a runner' I don't think I'd be looking to get involved with any of her tax affairs.

If it wasn't Daughter but some unknown, would you complete the P45s?

A-Vic

basically yes you know the current codes and save you work having to mess around too much at the begining why not yes you can complete p46 if you like but why not just complete the back page of the p45 with the new details !

Guest

No, complete P46, you need to be engaged by the person not the new business.

What happens if payroll is incorrect, you would not know having no involvement, staff could start getting refunds of tax never paid etc... If this is the case, obviously you have not met the person or carried out CDD you fall foul of MLR.

I think completing Part 3 of P45 as if previous employer has completed it would leave you wide open, there is a form for new starters with no P45 and i go back to my initial point. P46.

Emrhino

Yes, I don't want to get involved in daughter's affairs at all so think I would go down the P46 route and open brand new payroll period in my own software rather than touch hers.

Sounds like it could be a bit of a worm can..he still hasn't come back to me so might not need to worry!

Thanks again for all your thoughts..