Profit and loss reserves
Discussion
Zoon said:
What I'm struggling to understand is the previous years figure was -£100k, the latest figure is -£135k
Is the figure cumulative, i.e. 35k loss in the latest accounting period?
Yes. So if £100k is the accumulated loss at the end of (say) 2016, then they make a loss of £35k in 2017, the P&L reserves in the balance sheet for the two years will read (£100k) and (£135k) - a balance sheet is always cumulative and shows the position at a point in time - the P&L ‘resets’ every period and will show results for that period only. Is the figure cumulative, i.e. 35k loss in the latest accounting period?
You should be able to verify the loss using the P&L as the loss should read £35k
Exactly.
All you can see is the accumulated profits or losses (the reserves) that have built up in the company over its entire existence. What you cannot see is the individual profit and loss account showings Sales or Turnover/Income/ Direct Costs/Overheads/Financial Costs etc etc fort the relevant financial year.
There is no actual Profit and Loss account filed for you to look at.
All you can infer from the balance sheet is that the accumulated losses at the end of the previous year were £102,279 and at the end of the next year had worsened to £135,849. This implies that there was a loss for the more recent year of £33,570 but you have no indication whatsoever how those losses were incurred.
All you can see is the accumulated profits or losses (the reserves) that have built up in the company over its entire existence. What you cannot see is the individual profit and loss account showings Sales or Turnover/Income/ Direct Costs/Overheads/Financial Costs etc etc fort the relevant financial year.
There is no actual Profit and Loss account filed for you to look at.
All you can infer from the balance sheet is that the accumulated losses at the end of the previous year were £102,279 and at the end of the next year had worsened to £135,849. This implies that there was a loss for the more recent year of £33,570 but you have no indication whatsoever how those losses were incurred.
Eric Mc said:
My hunch is that they have paid themselves some dividends- possibly to get some money out of the company before the more draconian Income Tax rules for dividends came into effect on 6 April 2016.
An interesting note I have just spotted on the latest accounts:-Going Concern
The company has a balance sheet deficit as at 31 July 2017.
The Directors have paid dividends unknowingly in excess of the retained profits and undertakes to make no further distributions until such time as there are reserves available for the purpose.
Hmmm - so treating themselves as preferential creditors, which is against the law.
The company will also be subject to a Section 455 Corporation Tax surcharge due to the excessive dividends being taken.
The only way to clear the S.455 surcharge is to repay the excessive amount to the company.
They are behaving in a very dodgy manner.
The company will also be subject to a Section 455 Corporation Tax surcharge due to the excessive dividends being taken.
The only way to clear the S.455 surcharge is to repay the excessive amount to the company.
They are behaving in a very dodgy manner.
Eric Mc said:
Hmmm - so treating themselves as preferential creditors, which is against the law.
The company will also be subject to a Section 455 Corporation Tax surcharge due to the excessive dividends being taken.
The only way to clear the S.455 surcharge is to repay the excessive amount to the company.
They are behaving in a very dodgy manner.
Oh dear, the company in question are portraying themselves as being very successful and the MD has an MBE for services to business.The company will also be subject to a Section 455 Corporation Tax surcharge due to the excessive dividends being taken.
The only way to clear the S.455 surcharge is to repay the excessive amount to the company.
They are behaving in a very dodgy manner.
Not quite what the accounts seem to be telling us.
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