Accounts Incorrectly Filed as Dormant

Accounts Incorrectly Filed as Dormant

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I have been approached by somebody (the partner of one of my clients) who has been developing a phone app over the last couple of years. He set up a company for it but for the first couple of years filed the accounts as dormant. His understanding was that the app was still being developed and therefore as there was no trade in terms of sending to market or sales, the company could sit as dormant.

However during this time he has been incurring costs for developing the app. His company accounts are 31 August (so his 2013 accounts are already a month late and need filing by Monday to avoid further penalties). I said I would file trading accounts for him this time and put through the costs he's incurred. However is it possible to also include any costs he incurred before 1 September 2012? Costs go back to October 2010 so there is basically expenditure for two years prior to the accounting period.

Can I include this in the August 2013 accounts or will it open up a can of worms in that the two years previous shouldn't have been filed as dormant?

The other question is that all of the costs incurred are direct research and development costs in designing the app. Does this get treated as expenditure in the current year or capitalised? The app is not yet to market and there is still an element of uncertainty as to whether it will make it to market in the future.

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By johngroganjga
28th Jun 2014 15:34

Yes I would include all the expenditure to date in the 2013 accounts.

As to how to account for the expenditure just check out the conditions that have to be satisfied before development costs can be capitalised, and if they meet them capitalise them.

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