A client purchased an item of equipment they say cost £6000 saying it was paid for by cash and a personal loan from a relative so no money was paid from the business. They told me it was purchased on gumtree from a business that had ceased and could not get an invoice to which I said I could not accept this and couldn't put it through accounts and tax return. He then said he had contacted the guy and they were sending out an invoice which I received today.
i have googled name and address of the business listed on the invoice and can find no evidence that this business ever existed at that address. the unit number and address was advertised for letting so I called them and they said that this unit had not been used for the type of trade specified!
Surely if the piece of equipment exists and it is valued at around £6000 it's no different from someone bringing their own computer equipment into a business? I would just put it as capital introduced.
I would make sure I have this in writing from the client, and then I would do what the client says, posting via capital introduced. Your accountant report, or letter that goes with the tax return, should state that you have prepared the accounts and tax return based on the explanations and information provided by the client. You could even mention that you have included the asset, but warn client that it might not stand up on an investigation. If the client gets an investigation, its on them to satisfy HMRC or suffer the consequence. If they complain to you, you show them the letter where you pointed out the risk. If they signed, its on them.
Ultimately though.. if you don't trust the client that much, why act for them at all?
