Cash balances

burg

I've got my thoughts on what I need to do with the following but wanted some additional input.

Company with 31 Dec year end.

Suddenly in October c£10k disappears from their bank account. After lost of digging it appears this happened to lots of people with connections with Dubai after this bank changed policy. Arguments with the bank led to the return of c£7k but with a few days to the year end a letter informing them to remove all funds from all bank accounts within 7 days. c£25k was therefore moved to another account they hold but in another company name.

This money was returned shortly after the year end when a new bank account was opened.

I have two lines of thought.

1. the company no longer has the money in its possession but it is the companies money so record it as a sundry debtor.
2. As the situation was out of the ordinary and it was the quick simple fix record it as cash in hand.

I'm more with option 1 but would like to hear others thoughts.

Second question is what to do with the c£3k not accounted for?

The bank have stated they have kept it to cover legal fees. Initial steps involving a solicitor has shown that it will probably cost £10k or so to pursue so the directors have decided to write it off. However rather than just loosing it as it is potentially for legal fees can it be recorded as so?

I know it's a rather bizarre situation but I'm 99% certain that there is no wrong doing by the client just very odd behaviour by the bank.

deanshepherd

How bizarre. I know banks are thieving bar stewards but that takes the biscuit!

I would be inclined to put the £7k in sundry debtors and write the £3k off to the P&L. It would certainly be an allowable expense, assuming the account is held for trading purposes.

PGM

Nothing to do with transfers between accounts?

burg

No definitely not transfers

Thanks for your thoughts guys.

Thanks Dean. I assume when you put £7k you meant the £25k to sundry debtors? Also what would you write the missing £3k off as? Legal and Prof as advised by the bank? Some description to the effect of theft?

@PGM - definitely not transfers. The company only held one account. The description was 'Payment re to reconcile ref:- Manchester Premier'. When googled this came up with many cases with similar experiences all around the same time all for large sums of money. This was quickly identified as they have a regular bookkeeper who I know very well during reconciliation.

The explanation from the bank was vague at first but after getting the FSA involved the explanations were no better but the majority of the money returned. When attempting to get the last remaining £3k back there was more firm opposition from the bank stating it was to cover legal costs??? The battle is going on but short of putting more money than that into their own legal costs the money is gone! They had two companies with this particular bank of their 4 and the one had a £30k overdraft. They were given 7 days to return the funds and close the account. Luckily the directors had the money to tie them over until they could arrange another bank account and overdraft facility.

PS - Yes I agree Dean that it takes the biscuit and that they can still hold onto the money with little explanation. Fortunately the money is a small amount for them but that isn't the point. It has certainly made me think about using the particular bank. I don't currently but wouldn't use them for anything.

paulstafford

Maybe the bank ran out of money rather like RBS and Northern Wreck back in 07/08.

legal and professional seems as good a place as any to put the loss.

deanshepherd

Which bank was it?

Not a UK one I assume.

burg

It was a uk one actually dean. It was barclays!

deanshepherd

Shocking. I never did like Barclays.

AK002

Terrible.

I did google to ref and have a read of some of the complaints.

It's unreal TBH.

burg

Yes it is shocking and particularly if you Google as AK002 has done you will see that there are numerous examples of the same things happening time and again.