Basically Company A has decided to liquidate & set up Company B in it's place as of immediately. Petty Cash for Company B was not started from scratch so there are opening balances which are needed in order to make the accounts balance in sage. From my knowledge when you post in opening balance Sage posts the other side to the suspense - (This contra's out when the TB is input)
How do you suggest I deal with this difference - to be honest I was just considering leaving it there and just highlighting why there is a difference when necessary.
I don't do Sage questions but I think that there is a more fundamental issue buried in there.
Company A has folded but immediately sets up as company B using the assets (including cash) of the liquidated company...
This is known as a Phoenix company.
Why did company A liquidate? Did it have debts or other outstanding liabilities? If so, all cash including petty cash and all assets belong to the creditors of company A.
Only when the debts of A are settled, including the settlement of all fee's (accountant / liquidator) and outstanding taxes out of the assets of company A, are the remnants available to B.
I would advise talking to the companies accountants / liquidators before bringing forwards anything from A to B otherwise you risk the veil lifted on the owners.
Worth noting on that point is that HMRC have stated specifically (NIM12204) that where companies use this as a means of avoiding their debts then the debts of the first company fall to the directors and do not end with the demise of the original company.
If everything has already be resolved from the debt perspective then I'll leave it to others to advise about how to handle this in Sage.
If they have not then there are more serious issues at hand.
kind regards,
Shaun.
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Shaun
Responses are not meant as a substitute for professional advice. Answers are intended as outline only the advice of a qualified professional with access to all relevant information should be sought before acting on any response given.
I agree with Shaun completely and would ask the same questions. This is not an accounting issue, it is more of a directors responsibility following the Companies Act and proper advice should be seeked.
I don't know the full story behind the set up of newco but ensure directors have considered wrongful trading issues as well,if that is indeed the case here.
I am not a sage expert but why would you want to carry fwd petty cash to a new company? I imagine you can close the ledger in company A and any cash left behind (after settlement of all debts) would belong to shareholders? And most importantly, how big would a petty cash amount be?
