I have a client who's receipts from customers are usually by card, however he gets around two or three a month which are in the form of cash. Rather than pay this money into the business bank a/c he takes the money for himself and it is charged to the DLA. However he has been advised by his accountant that nothing can now be charged to the DLA until after the middle of November. This will now obviously mean that he will not be able take the cash receipts for himself, therefore in order to account for this and that the cash will remain in the business the only course of action I can see will be for him to now pay the cash into the business bank account or hold as petty cash in the office (however as this cash can sometimes be in the thousands this does not seem sensible of practical). Are there any alternative ways of accounting for the cash that I have not thought of?
Its very possible he had an overdrawn loan account, and in order to recover S455/S419 tax, the accountant has brought the DLA to NIL, and he cant draw anything to make him overdrawn again within a certain period.
I would suggest
A) Ask the client to bank any cash
B) Ask the accountant if there is scope to vote an interim dividend, so that a credit balance is created on the DLA. However it might be that the accountant has already voted what they can, to clear the loan account up to whatever date.
C) Show it on your cash account, and let the accountant deal with any cash balance left on your system, at the year end - you need to post it to get a correct debtors figure, and it's not your problem if he is taking the cash for himself and not telling you.
