The Book-keepers Forum (BKF)
The Book-keepers Forum (UK) -> VAT, Payroll & Tax -> Balance Sheet incorrect
Post Info TOPIC: Balance Sheet incorrect
Artois


Guru

Status: Offline
Posts: 1313
Date:
Balance Sheet incorrect
Permalink  

 

Hi all

New client has a Ltd Co ''owning' two properties which they have asked me to do the accounts for, they done last years accounts themselves and the properties have been included on the balance sheet but there were no profits on rental, on taking over the accounts and looking into this further it transpires that the mortgages are actually in the individuals name so the properties should never have appeared on the Companies Balance Sheet as an asset, I need to remove the properties from this years B/S but am considering the best way to go about this without having to amend the previous accounts, any suggestions? It only affects the CH financial statements as there were no profits to declare on the CT600

Many thanks     



__________________

Doug

These are only my opinions of how I see things and therefore should not be taken as advice
BudgetB


Guru

Status: Offline
Posts: 709
Date:
Permalink  

Hi Doug,

I would redo last year personally because that is such a large 'error'. FRS 102/105 says that prior year adjustments need to be done if the error is material, I'd certainly call a couple of houses material especially if it has made the balance sheet look much better than it would have done otherwise. That said, there's no tax gain/loss caused by the error.

I assume that they introduced the properties to the accounts via the DLA? Your other option I suppose would be to reverse the transaction in the current year to cancel the effect out.

You said that the mortgage is in the individuals name, and I assume that the properties are also? You don't have a situation with a company owned property with a private mortgage mess?

__________________

Jenny

 

Responses are my opinion based on the information provided.  All information should be thoroughly checked before being relied on.

 
Artois


Guru

Status: Offline
Posts: 1313
Date:
Permalink  

BudgetB wrote:


You said that the mortgage is in the individuals name, and I assume that the properties are also? You don't have a situation with a company owned property with a private mortgage mess?

 Hi Jenny

Thanks for the reply, 

On further investigation it seems that this is indeed the case, the deeds are in the name of the Company but the mortgages are in the individuals name under a lease, still trying to get the finer details of why it was set up like this but it seems to be on the advice of the mortgage company, I am trying to work out how the Company actually owns the properties and then gave out leases and have asked for what the solicitors have said.

The properties are now both being rented out and my way of thinking is that because the mortgage for the 'lease' is in the individuals name then the profits from the rentals should be taxed as income to the individual, would you agree? 

Many thanks

Doug



__________________

Doug

These are only my opinions of how I see things and therefore should not be taken as advice
Riel


Veteran Member

Status: Offline
Posts: 67
Date:
Permalink  

the company could have a beneficial interest perhaps

__________________
Riel
BudgetB


Guru

Status: Offline
Posts: 709
Date:
Permalink  

Hi Doug,

I had a funny feeling that was what you were going to say!  People do like to make things as complicated as possible.  I presume the mortgage advisor was trying to get them a cheaper rate of interest than a commercial mortgage.

Generally the person who owns the property would be the taxable person, but if the company has leased the properties to the director (assumed) who is then renting them out then yes I would agree that he is making a private supply of property rental and should be completing the land & property pages of a SA return.  If the co is paying the mortgage then those payments would have to go to the DLA I think.

Sounds like this is a case of trying to establish what they thought the end product was going to look like, and then establish the legalities of what they've actually ended up with.  Often the two are oceans apart.

 



__________________

Jenny

 

Responses are my opinion based on the information provided.  All information should be thoroughly checked before being relied on.

 
BudgetB


Guru

Status: Offline
Posts: 709
Date:
Permalink  

Riel wrote:

the company could have a beneficial interest perhaps

 

Maybe, but the company owns them in the first place so generally a BI election would be to move the rental profits away from the company, not towards it.



__________________

Jenny

 

Responses are my opinion based on the information provided.  All information should be thoroughly checked before being relied on.

 
Artois


Guru

Status: Offline
Posts: 1313
Date:
Permalink  

 

Hi Jenny & Riel

Apologies I thought I had replied to this, thanks for the replies

I am still waiting for further information regarding the freehold and how much this was purchased for, once I have this i am thinking of removing the properties from the B/S and only having the freehold on this, because the leases are in the individuals names i will declare the rental income as theirs and not the Company.

To complicate matters further the Company is limited by guarantee and not shares so if the rental income did have to go in the Company then the only way to extract and money would be via salary which would not be good as both are in employment.

Oh the joys of accountancy!!! 



__________________

Doug

These are only my opinions of how I see things and therefore should not be taken as advice
BudgetB


Guru

Status: Offline
Posts: 709
Date:
Permalink  

The accountancy part is fine, it's the clients that are the source of all the problems haha!!



__________________

Jenny

 

Responses are my opinion based on the information provided.  All information should be thoroughly checked before being relied on.

 
Page 1 of 1  sorted by
 
Quick Reply

Please log in to post quick replies.
The Book-keepers Forum (UK) -> VAT, Payroll & Tax -> Balance Sheet incorrect
Tweet this page Post to Digg Post to Del.icio.us
Members Login
Username 
 
Password 
    Remember Me  
©2007-2024 The Book-keepers Forum (BKF). All Rights Reserved. The Book-keepers Forum (BKF) is a trading division of Bookcert Ltd. Registered in England Company Number 05782923. 2 Laurel House, 1 Station Rd, Worle, Weston-super-Mare, North Somerset, BS22 6AR, United Kingdom. The Book-keepers Forum and BKF are trademarks of Bookcert Ltd. This forum is a discussion forum only. There will usually be more than one opinion to any question and any posting should not be viewed as a definitive solution. No responsibility for loss occasioned to any person acting or refraining from action as a result of any posting on this site is accepted by the contributors or The Book-keepers Forum. In all cases, appropriate professional advice should be sought before making a decision. We reserve the right to remove any postings which are offensive, libellous, self-promoting or engaged in covert marketing. We will not notify users of removals. The views expressed in the forum posts are those of the individual and do not necessary reflect or agree with those of The Book-keepers Forum. Any offensive or unsuitable posts will be removed by the moderators. Any reader of this forum can request for a post to be looked into by sending an email to: bookcertltd@gmail.com.

Privacy & Cookie Policy  About