Summary
Summary ULAW LPC, Solicitors Accounts Chapter Readings
- Module
- Solicitors Accounts (SAC)
- Institution
- University Of Law (ULaw)
ULAW LPC, Solicitors Accounts Chapter Readings
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Intro to PP – WS1 Solicitors Accounts TIFF LIAOChapter 13 – Transfers page 151
INTRODUCTION
- Those providing legal services often receive funds from clients that are a mixture of business and client money.
- RULE 4.2 of the Accounts Rules requires you to allocate funds promptly to the correct bank account.
SUMMARY
A cheque received from a client which is a mixture of business and client money can be split between the business
and client bank account, or paid into either the client or business bank account.
If it is all paid into the client bank account, the business money must be TRANSFERRED to the business bank
account promptly (14 days)
If it is all paid into the business bank account, the client money must be TRANSFERRED to the client bank account
promptly.
RECIEPTS
PARTLY OF BUSINESS AND
PARTLY OF CLIENT
You may receive a cheque which is made up partly of business money and partly of client money
e.g. You act for Carollo Ltd.
You paid £40 out of the business bank account on its behalf on 1 February.
In response to a request by you, it sends a cheque for £100 on 10 February, partly to pay back
the £40 and partly on account of costs.
The £40 is business money because it is received for a paid disbursement, and the £60 is client
money.
- If your bank allows it, you can split the cheque
- This means paying the different parts of the cheque into diff bank accounts
- On splitting the cheque, the entires are:
DR Business potion to CASH account (£40) – BUSINESS
SPLIT DR Client portion to CASH account (£60) – CLIENT
CHEQUES
CR Business portion to CLIENT ledger – BUSINESS
CR Client protion to CLIENT ledger – CLIENT
CLIENT: CAROLLO LTD
MATTER:
Date Details BUSINESS ACCOUNT CLIENT ACCOUNT
Feb DR CR BAL DR CR BAL
1 Cash 40 40 DR
10 Cash 40 - 60 60 CR
CASH ACCOUNT
Date Details BUSINESS ACCOUNT CLIENT ACCOUNT
Feb DR CR BAL DR CR BAL
1 Carollo 40 Xxx
10 Carollo 40 60
UNSPLIT - Banks usually unwilling to split cheques in practice – administrative problems
CHEQUES
AND - RULE 4.2 provides that money recived as a mixed payment reciept the firm can CHOOSE whether to
DIRECT pay it initially in the client or business account
TRANSFERS
- Some adopt a fixed rule that all mixed reciepts are paid intially to the client bank accont
1
TIFF LIAO
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