Business Funds in "Directors" Account

[grgzy]

Hello,

What would you do in this situation>

The scenario: A client (Director of 123 LTD) was running their business through the 123 LTD bank account, with all income + expenses being processed through that account.

Until they decided to switch banks and [foolishly] closed the original bank account before the replacement one was opened.

The replacement one was never approved and then received deposits for work into their own personal account (which they use for day-to-day living expenses also) as a temporary measure to secure work while the replacement was opened.

Deciding that there was no need for the business bank account or a LTD Co., she asked her accountant to shut down 123 LTD - but they never did - and never opened a new business bank account.

A few months later, all business-related activities have been using their personal account and the LTD Co. is still awaiting strike-off. The client assures me they thought they were operating as a sole trader and not invoiced anyone on behalf of "123 LTD".

In terms of accounting, what would you do in this situation?

• Can the client pay taxes on the funds received to the personal account as a sole trader (And pay the fine for not registering)?
• Do the funds received be included in a directors loan account and returned to the business (once a suitable account is opened)?

 

[Scalloway]

What name went on the invoices that were paid into the personal account?

 

[grgzy]

What name went on the invoices that were paid into the personal account?

As far as I've seen, no invoices relating to payments into the personal account were invoiced as "123 LTD", neither has any payment references etc used the entity name in full.

 

[Scalloway]

Then whoever does the accounts need to sit down and compile the transactions into a limited company set and a sole trader set. These will be used to prepare accounts for both entities.

If the self employment started after 5 April 2019 the client has until 5 October this year to register as self employed.

 

[grgzy]

Then whoever does the accounts need to sit down and compile the transactions into a limited company set and a sole trader set. These will be used to prepare accounts for both entities.

If the self employment started after 5 April 2019 the client has until 5 October this year to register as self employed.

Thanks for your input, perhaps I am being paranoid that HMRC will mistake negligence & lack of registration for something worse.