Forum

• # 54392
• Fri 11 Feb 2011 03:37 PM

Hi,

I'm looking for some advice on the following:-

My clients, a husband and wife have up till now been running their Ltd company as joint directors, they have just informed me that the husband is being removed as a director and is transferring his shares to his wife (they have provided me with a copy of form TM01 Termination of Appointment of Director and Stock Transfer form - both have been sent by them to their accountant).   I'm not sure of the reason for this but it's nothing acrimonious  - they are not splitting up , so possibly on the advice of their accountant. I just need to clarify if there's anything I need to do generally from a bookkeeping point of view because of this. Some things have sprung to mind - The directors loan account is in joint names, so is it OK to continue posting to this account once the husband has been removed as a director or are there any adjustments etc that need to be done to this account first? Also if as currently happens the husband introduces funds / pays for business related items from his own funds or has his personal c/c paid from the business how can these be posted in the accounts? (crediting/debiting the DLA does not seem right as he is no longer a director)?  The husband also draws a director's salary so this will need to stop but is there anything else that would need to be done surrounding this?

Any advice you can give on the above points or in general would be much appreciated.


Many Thanks


Richard    

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• # 54421
• Sat 12 Feb 2011 07:42 PM

Hi Richard

I have no direct experience in a situation like this but agree with the issues that have come to mind. I think you need to take instruction from your client and their accountant. They should advise you what is to happen to the directors loan account - whether part is to be paid out to the husband or all to remain in the wife's name. I wouldn't have thought there is any harm in having a new loan account in the husband's name if he is leaving money in as basically the company probably has powers to borrow from anyone. You could then post appropriate entries.

If he is going to continue to lodge personal monies to the company or have his bills paid then these entries could probably pass through the new loan account. Care would be needed that he did not overdraw this account as the company may not have powers to lend.

If he resigns as a director he could revert to a normal employee if he still receives a salary. If you do the payroll then the rules for director's NIC would need to be changed back to normal. If he resigns completely then probably issue a P45.

Remember to review and update your MLR Due Diligence and Risk Assessment forms to account for change of director and ownership.

Sorry no real answer here but I think you need points to be answered by your client's accountant if they cannot give you clear guidance.

• Leslie Watson
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• # 54543
• Wed 16 Feb 2011 10:12 PM

Hi Richard

I think Leslie has mostly covered it for you.

The DLA needs to be apportioned as agreed the accountant will probably have this spliut as a valuation of the company should have been done re the share transfer.

Any money put in and taken out by the husband (Other than salary) should go via a current liability account LOAN - A BLOGGS.

He can still draw a salary even if he is not a director.

The main issue here will be his behaviour as he will have to be careful not to be seen as a shadow director.  

Cheers
Stuart

• Forum Moderator, South East & Greater London Regional Chairman
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• # 54743
• Fri 25 Feb 2011 04:46 PM

Hi,

Many thanks for your advice.

Richard 

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