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RSL
24-03-2005, 01:50 PM
Hey guys,

perhaps someone could help me out with this anomaly. My client has 2 UK business accounts one from when he started as a sole trader the other for the LTD.

He still uses his sole trader account and hardly ever uses the LTD account however he has been told that legally he needs to keep his LTD account.

He's weary about closing his sole trader account (stubborn more like!)

Any ideas on the legislation behind this, I'm fairly sure there's a straightforward and VERY obvious solution but perhaps anyone with business banking exp can clarify.

Babylon
27-03-2005, 02:32 PM
Hi,

In the eyes of the law a "Limited Company" is a separate, stand alone legal entity.

In your client's case the legal status of the sole trader account is different to that of the Ltd company's. It is therefore wrong to use the sole trader account for the benefit for the Ltd company. Moreover, the sole trader business ceased when it became a limited company. What should have happened is that after the incorporation of the company, your client should have informed the bank and got the account's name changed instead of carrying-on. Get him to speak to his bankers and get it changed if he wants to keep operating the sole trader account. It is better late than never!.

Regards,

Joel
http://www.babylonbusinessfinance.com

charles-b
04-05-2005, 10:32 AM
seriously dodgy if you ask me. this is often done when companies are going to go under to syphon off some of the cash. Or to avoid VAT. he may be legitimate and it may be ok but he is openning himself up to a ton of trouble with the inland revenue and others. tell im to stop. if he does work under one hat and pays the money into the other that is fraud it doesnt matter if the net tax or whatever is the same. they are seperate entities and should be kept at arms length. warn him now. he is entering into a wolrd of trouble if he continues unless he is scrupulously honest. "hardly ever uses" is no good. he should use one account or the other for work never either/ or