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taxadvisor.uk, Chartered Certified Accountant
Category: Tax
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Experience:  FCCA - over 35 years experience as a qualified accountant (UK based Practitioner)
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I'm filing my first CT600 and am stuck on Called Up Share Capital. Our company is ver

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I'm filing my first CT600 and am stuck on Called Up Share Capital. Our company is very basic. We do not have any assets. We have no employees. Those who work for us invoice for their time.
100 shares of £1 were issued at time of incorporation. So, I put 100 in box AC70. I now I have an error message in AC80.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.
Hello and welcome to the site. Thank you for your question.

Please tell me if you operate a company bank account and confirm what the balance was at year end.

Have you prepared any set of accounts... it would be helpful if you complete boxes as applicable and let me review your accounts.

PROFIT AND LOSS Box No. This year
turnover AC12 0
cost of sales AC14 0
gross profit AC16 0
distribution costs AC18 0
administrative expenses AC20 0
other operating income AC22 0
operating profit or (loss) AC26 0
interest receivable AC28 0
interest payable AC30 0
profit or (loss) on ordinary activities before taxation AC32 0
tax on profit or loss on ordinary activities AC34 0
profit or (loss) for the financial year AC36 0
dividends for the period AC38 0
net balance for the financial period transferred to reserves AC40 0
BALANCE SHEET Box No. This year
intangible assets AC42 0
tangible assets AC44 0
TOTAL FIXED ASSETS AC48 0
stocks AC50 0
debtors AC52 0
cash at bank and in hand AC54 0
TOTAL CURRENT ASSETS AC56 0
creditors due within one year AC58 0
NET CURRENT ASSETS AC60 0
TOTAL ASSETS LESS CURRENT LIABILITIES AC62 0
creditors due after more than one year AC64 0
provision for liabilities AC66 0
TOTAL NET ASSETS AC68 0
CAPITAL AND RESERVES Box No. This year
called up share capital AC70 0
revaluation reserve AC76 0
profit and loss account AC74 0
TOTAL SHAREHOLDERS FUNDS AC80 0
Difference xxxx 0


Many thanks
Customer: replied 2 years ago.

Please tell me if you operate a company bank account and confirm what the balance was at year end.

YES, WE DO. THE BALANCE WAS £807.73

I personally lent the company £2460 (Director's Loan Account). I'm not sure where this is listed (Under debtors??)

Have you prepared any set of accounts... it would be helpful if you complete boxes as applicable and let me review your accounts.

























































































































































































PROFIT AND LOSSBox No.This year
turnoverAC123905.00
cost of salesAC146236.00
gross profitAC16-2331.00
distribution costsAC180
administrative expensesAC200
other operating incomeAC220
operating profit or (loss)AC26????
interest receivableAC280
interest payableAC300
profit or (loss) on ordinary activities before taxationAC32-2331
tax on profit or loss on ordinary activitiesAC340
profit or (loss) for the financial yearAC36-2331
dividends for the periodAC380
net balance for the financial period transferred to reservesAC400
BALANCE SHEETBox No.This year
intangible assetsAC420
tangible assetsAC440
TOTAL FIXED ASSETSAC480
stocksAC500
debtorsAC520
cash at bank and in handAC54807.73
TOTAL CURRENT ASSETSAC560
creditors due within one yearAC580
NET CURRENT ASSETSAC600
TOTAL ASSETS LESS CURRENT LIABILITIESAC620
creditors due after more than one yearAC640
provision for liabilitiesAC660
TOTAL NET ASSETSAC680
CAPITAL AND RESERVESBox No.This year
called up share capitalAC70 £100 ???
revaluation reserveAC760
profit and loss accountAC74?????
TOTAL SHAREHOLDERS FUNDSAC80?????
Expert:  taxadvisor.uk replied 2 years ago.
Owen, thank you for your prompt response.

You stated you lent the company £2,460. This figure will remain a creditor till such time the company repays you.

Furthermore, the company made a loss in Yr 1 of operation. I think you may have put more money in the business than you think. How were the losses funded when you also have £808 in the bank account.

I have adjusted your directors' account for £100 called up share capital and also increased the director's account (creditors to cover the difference between total net assets and shareholders' fund which was 679.

The balance sheet agrees and there is no difference. Here is my version for your consideration ....

PROFIT AND LOSS Box No. This year
turnover AC12 3,905
cost of sales AC14 6,236
gross profit AC16 -2,331
distribution costs AC18 0
administrative expenses AC20 0
other operating income AC22 0
operating profit or (loss) AC26 -2,331
interest receivable AC28 0
interest payable AC30 0
profit or (loss) on ordinary activities before taxation AC32 -2,331
tax on profit or loss on ordinary activities AC34 0
profit or (loss) for the financial year AC36 -2,331
dividends for the period AC38 0
net balance for the financial period transferred to reserves AC40 -2,331
BALANCE SHEET Box No. This year
intangible assets AC42 0
tangible assets AC44 0
TOTAL FIXED ASSETS AC48 0
stocks AC50 0
debtors AC52 0
cash at bank and in hand AC54 808
TOTAL CURRENT ASSETS AC56 808
creditors due within one year AC58 3,039
NET CURRENT ASSETS AC60 -2,231
TOTAL ASSETS LESS CURRENT LIABILITIES AC62 -2,231
creditors due after more than one year AC64 0
provision for liabilities AC66 0
TOTAL NET ASSETS AC68 -2,231
CAPITAL AND RESERVES Box No. This year
called up share capital AC70 100
revaluation reserve AC76 0
profit and loss account AC74 -2,331
TOTAL SHAREHOLDERS FUNDS AC80 -2,231
Difference xxxx 0

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

I think I have over-simplified our business records based on my prior expertise in personal Self-Assessment. Would you be happy for me to give a more detailed breakdown in the hope you might be able to assist with a more accurate balance sheet?

Many thanks for your help so far. It has been enlightening....

Expert:  taxadvisor.uk replied 2 years ago.
Owen, thank you for your reply...

Please advise what detailed breakdown you would like to enable you to have a better understanding of your balance sheet..

If you don't have any debtors and the only creditor is director's financial support in the funding of working capital, then your balance sheet is relatively straight forward.

What concerns me is trading at a loss.

many thanks
Customer: replied 2 years ago.

Ok, so some further information....

100 x £1 shares issued to two shareholders (50 shares to each).

At date of incorporation, £25 from each shareholder was put into the company (and as such, opened the company bank account).

Q1. I'm not sure what the implication of this is? Do the shareholders owe £25 each to the company?

How is this recorded in the balance sheet?

Is it prudent to invest a further £25 each?

On the 9th Feb 2014, the company purchased an set of microphones on a 12 month interest payment plan. The cost of this item was £598.50.

The first direct debit payment of £53.86 was taken from the company account on 10th March 2014.

I initialled included the full amount as "cost of sales". Following your in-depth answer, I now realise that the company still owes £544.64 to the supplier at the end of 2013-14 (our accounts are made up to 5th Apr).

Q2. Do we include the 544.64 under "creditors"

Q3. Does this item now become an asset. I'm assuming yes. But how do we then balance the book?

As company director, I purchased a second electronic item, on behalf of the company, through my personal self-employed bank account. To reimburse myself, I invoiced the limited company for the full amount. The amount was £150. I am assuming this item also becomes an asset of the company?

Having revisited the figures, I'm confident that the Directors Loan account amounts to £2460 as previously stated.

I understand your concern about operating at a loss. We are in the entertainment industry and it was necessary to invest in our first year to compile our promotional material. I'm happy to say that in yr2 we are now operating in profit.

Look forward to hearing from you and really appreciate all your help.

O

Expert:  taxadvisor.uk replied 2 years ago.
Owen, thank you for your reply and for additional information.

Ok, so some further information....

100 x £1 shares issued to two shareholders (50 shares to each).

At date of incorporation, £25 from each shareholder was put into the company (and as such, opened the company bank account).

Q1. I'm not sure what the implication of this is? Do the shareholders owe £25 each to the company?

How is this recorded in the balance sheet?

[a]

If you have only paid £50 out of £100 for shares issued then £50 remains receivable at the year end (balance Sheet date). The entries in your balance sheet for unpaid called up share capital are

DR Called up share capital unpaid

CR Called up share capital

[q]

Is it prudent to invest a further £25 each?

[a]

I would invest a further £25 each. For accounting purposes treat this as cash paid for the other 25 shares each at balance sheet date or reduce amounts owed on director’s account.

In my version of the balance sheet presented to you I had reduced the director’s account by £100 in the absence of information now provided.

On the 9th Feb 2014, the company purchased an set of microphones on a 12 month interest payment plan. The cost of this item was £598.50.

The first direct debit payment of £53.86 was taken from the company account on 10th March 2014.

I initialled included the full amount as "cost of sales". Following your in-depth answer, I now realise that the company still owes £544.64 to the supplier at the end of 2013-14 (our accounts are made up to 5th Apr).

Q2. Do we include the 544.64 under "creditors"

Q3. Does this item now become an asset. I'm assuming yes. But how do we then balance the book?

[a]

You should move the cost price of microphones from cost of sales to tangible assets in the balance sheet and show amount still to be paid as creditor at the year end.

Your entries to reflect purchase of set of microphones are

DR Tangible assets £598.50

CR Bank account £53.86

CR Creditors £544.64

[q]

As company director, I purchased a second electronic item, on behalf of the company, through my personal self-employed bank account. To reimburse myself, I invoiced the limited company for the full amount. The amount was £150. I am assuming this item also becomes an asset of the company?

[a]

I presume you have been paid for this item. Depending on what you think is the useful life of this electronic I would be tempted to write off this sum as an expense in the year and not capitalise it.

If you decide to capitalise it then it is a tangible asset.

[q]

Having revisited the figures, I'm confident that the Directors Loan account amounts to £2460 as previously stated.

[a]

I hear what you say... your accounts do not balance unless you do this adjustment to clear the difference between total net assets and shareholders funds .

I understand your concern about operating at a loss. We are in the entertainment industry and it was necessary to invest in our first year to compile our promotional material. I'm happy to say that in yr2 we are now operating in profit.

Look forward to hearing from you and really appreciate all your help.

I hope this is helpful and answers your question.

Customer: replied 2 years ago.

Ok, I'm getting closer.... this is my revised balance sheet.


























































































































































































PROFIT AND LOSS



Box No.



This year



turnover



AC12



3905



cost of sales



AC14



5638



gross profit



AC16



-1733



distribution costs



AC18



0



administrative expenses



AC20



0



other operating income



AC22



0



operating profit or (loss)



AC26



-1733



interest receivable



AC28



0



interest payable



AC30



0



profit or (loss) on ordinary activities before taxation



AC32



-1733



tax on profit or loss on ordinary activities



AC34



0



profit or (loss) for the financial year



AC36



0



dividends for the period



AC38



0



net balance for the financial period transferred to reserves



AC40



-1733






BALANCE SHEET



Box No.



This year



intangible assets



AC42



0



tangible assets



AC44



599



TOTAL FIXED ASSETS



AC48



0



stocks



AC50



0



debtors



AC52



0



cash at bank and in hand



AC54



808



TOTAL CURRENT ASSETS



AC56



1407



creditors due within one year



AC58



2955



NET CURRENT ASSETS



AC60



-1548



TOTAL ASSETS LESS CURRENT LIABILITIES



AC62



0



creditors due after more than one year



AC64



0



provision for liabilities



AC66



0



TOTAL NET ASSETS



AC68



-1548






CAPITAL AND RESERVES



Box No.



This year



called up share capital



AC70



100



revaluation reserve



AC76



0



profit and loss account



AC74



-1733



TOTAL SHAREHOLDERS FUNDS



AC80



-1633



Still doesn't quite add up......I haven't included the CR Bank account £53.86 as I'm not sure where this is recorded.

Expert:  taxadvisor.uk replied 2 years ago.

Owen, thank you for your reply.

As you have already made a first payment of £53.86 before the year end, I presume your bank balance at balance sheet date already reflects it and therefore you don't have to do anything about it.

We are getting there... You now have a difference of £85 between Total net assets and Shareholders' funds and it is unidentified. I still maintain it is most likely there is a double entry of it missing and I would be inclined to increase the monies owed on directors' account by this sum to make the balance sheet agree. We are not looking at a big difference.

If you were to change AC58 to read 3,040 then the balance sheet agrees and there is no difference.

I hope this is helpful.

taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you accepting my answer.

Best wishes.