Dormant company or not?

Dormant company or not?

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Hello, this is a variation on previous 'is this company dormant?' questions, I think.  My client set up a company for a new business, opened a bank account (but never made any deposit into it), and engaged lawyers to provide start-up advice.  The bank account went modestly overdrawn thanks to bank charges, but the client made no bank transactions; after some months the bank made the account dormant; and later the bank closed the account and wrote off the accumulated charges (the account was on start-up company terms, so modest charges).  The lawyers billed this company for their work and the bill was paid by one of the client's other companies.  The client has decided to close the company.  Earlier I had advised the client that his company was trading, because the bank charges and legal bill would have to appear on the balance sheet.  Now, however, all the entries on the balance sheet appear to be cancelled by the kind actions of the bank and the client's other company.  The entire life of the company will have been about 16 months and I am thinking of filing DCA accounts for one accounting period covering the whole life.  What would others do?

Replies (8)

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By pawncob
23rd Jun 2014 12:13

Who's going to challenge it?

Treat it as dormant. Reg won't care. HMRC won't care. Sleeping dogs............

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By simes
23rd Jun 2014 13:05

Annual return problem?

Thanks pawncob, my instincts are the same as yours, but does it create a problem that in the one annual return that's been submitted, the company was recorded as non-dormant - thanks solely to these balance sheet transactions that have effectively been cancelled?

I am inclined to do as you suggest nevertheless because any query can be answered and there is no tax due.

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Replying to pauljohnston:
By johngroganjga
23rd Jun 2014 14:06

Puzzled

simes wrote:

Thanks pawncob, my instincts are the same as yours, but does it create a problem that in the one annual return that's been submitted, the company was recorded as non-dormant - thanks solely to these balance sheet transactions that have effectively been cancelled?

I am inclined to do as you suggest nevertheless because any query can be answered and there is no tax due.

Where in a company's annual return does it say whether it is dormant or active?

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RLI
By lionofludesch
23rd Jun 2014 13:11

Abbreviated

Belt and braces - but is it that much extra effort to file abbreviated ?

There can't be many notes ......

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By SimonLever
23rd Jun 2014 14:12

Why file

If by "The client has decided to close the company" you mean it is going to be struck off then why file any accounts at all?

Just apply to Co's House to have the company struck off. No one will complain except possibly HMRC in which case you can explain that the company did not trade and there was no tax due.

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By TerryD
23rd Jun 2014 15:22

SIC code

I suppose the SIC code on the AR gave the company a "trade", but I don't think that's a problem.

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Replying to DJKL:
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By simes
24th Jun 2014 12:35

'Dormant' is a SIC code, yes.

TerryD wrote:

I suppose the SIC code on the AR gave the company a "trade", but I don't think that's a problem.

Indeed, that's what I meant by saying that the annual return had reported the company to be non-dormant.  There is an SIC code for 'dormant company', which in this case I didn't use as I could see balance sheet transactions, hence it was trading.  I could file abbreviated accounts but as far as I can tell they would be VERY abbreviated with no entries apart from the initial share capital!  

Thanks, everyone, for your thoughts.

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Replying to Tim Vane:
RLI
By lionofludesch
24th Jun 2014 12:39

Abbreviated

simes wrote:

I could file abbreviated accounts but as far as I can tell they would be VERY abbreviated with no entries apart from the initial share capital!  

And a couple of notes, I hope.

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