INS12651 - Accounting issues: Accounting for Payments received
All monies for insolvent traders are usually received at Finance, Southend who will account for this money except in cases of doubt. Payments received at Accounts, Liverpool are forwarded onto Finance, Southend for them to process.
For any cases of doubt, the money will be placed on MCD and transferred to NIU. Remittance advice slips (RAS) are passed to caseworkers, returned to the issuing Administrative Assistant and then appropriation instructions are forwarded to Finance, Southend .
Consequently, instructions for accounting for money may be broadly split into the following categories;
Money received at National Insolvency Unit
Any money received at NIU directly is to be forwarded to Accounts, Liverpool.
Money received at Accounts, Liverpool
- Remittances with correspondence
Accounts will complete form V138 and send document together with payment and copies of correspondence to Finance, Southend.
Original correspondence will be sent to NIU for information.
Money received at Finance, Southend
- Returns with remittances.
IPs have been asked to send all returns and payments direct to Shipley. These will be processed directly onto the computer. A D-print (generated via EF) will inform the caseworker that the return and remittance has appeared on the VAT account Money accounted for as Further Recovery After Write Off (FRAWO) and any other cases.
- In cases of doubts, the money will be placed on MCD and transferred to NIU for accounting instructions.
NIU action upon receipt of MCD
Upon receipt the MCD will be booked onto an Access database. The MCD and RAS form is then forwarded to the NIU caseworker to complete the RAS form. The Officer must include RASs with the priority correspondence.
It is important that RAS forms are completed and returned within 7 days of receipt.
- Complete the RAS giving account instructions. (see below)
- Remove the correspondence and return the RAS to Admin as soon as possible.The RAS and MCD will be linked and sent to Reconciliation Unit, 5th Floor South West, Alexander House, Southend.
Statistics of the number of RASs and the amounts received are provided by Finance.
Caseworker completion of RAS
- Check that the registration number quoted is correct.
- If the VAT number shown on the RAS is incorrect, rule through with one line so that the original number is still visible and write the correct number above.
NB: If a change in number requires a RAS to be transferred to another caseworker, Finance should be notified so that records can be amended.
- Any RAS received by a caseworker where NIU control cannot be established should be returned to Finance with a covering memo.
- Insert the Insolvency code on the covering memo.
- If the credit is to be placed on the VAT Mainframe then the remittance should be accounted for on the front of the RAS.
The caseworker should split any credits as appropriate between:
- Pre-relevant:
Preferential: VAT (for claims lodged prior to 15th September 2003)
Non-preferential: VAT
Default Surcharge
Penalty
Interest
- Post-relevant or
- Other
The caseworker should initial, add the caseworker reference and date the RAS.
- If the credit is to be accounted for as FRAWO, then the bottom half of the RAS should be completed using the available boxes (see section 12653 on ‘Dividends’ below).
Most of the boxes are self explanatory but if there are any doubts or difficulties, line management should be consulted.
If the bottom half of the RAS has been completed then the caseworker should initial, date and add the caseworker reference in the relevant space on the back of the RAS.
Caseworkers should take care when completing a RAS to ensure that:
- Pre and post relevant payments are distinguished.
- Preferential and non preferential payments are distinguished.
- To apportion dividend between the VAT and non-VAT elements of the claim, in respect of non preferential remittances.
Return document to issuing AA who will manually input these details on the RAS database.
Dividend
See section 12653 below for guidance on treatment of dividend payments.
Other
If money is received for any other reason care should be taken to account for it correctly.
There are a number of boxes on the bottom half of the RAS which give guidance, but if there is any doubt as to what the money received represents, clarification should be sought from the IP.
Again, money accounted for on the bottom half of the RAS will not be shown on the VAT account.
MCD reminders
Reminder action is taken for MCDs’ not returned to Finance Southend as follows:
- A reminder list of all outstanding MCDs will be produced by Finance Southend. The list will be circulated to the relevant NIU staff for appropriate action..
- For clarification the list should be noted as follows (and not with any other accounting instructions which can be misleading):
Either;
- CLEARED (and appropriate date).
or,
- DUPLICATE RAS REQUIRED.
Caseworkers should make every effort to locate and complete the original RAS where possible to avoid creating unnecessary administration work.
NB: Where a RAS cannot be actioned or is not proper to NIU, Finance must be informed at the earliest opportunity. Further reminders will be delayed or cancelled accordingly.
Further action
Overpayment by IP
Where an amount has already been accounted for as FRAWO on a RAS and subsequently it is found than an overpayment has been made, the following action should be taken to effect repayment to the IP.
- Obtain the original MCD number from the AA
- send a memo to Finance as follows;
MCD No Original MCD amount £
Brought to account as FRAWO at date of
Please reconstruct £ ………………. of the above MCD and repay as follows:
Name of Insolvent Trader
IP’s Name and Address
Reason for Repayment
