Incorporated when they should not have

Incorporated when they should not have

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I have been approached by a pre-school playgroup who were foolishly advised to give up their charitable status and incorporate by guarantee in July 2012.

A single set of accounts was done (not by me) for the period ending 31 August 2013 (the company's AR date) and cover the whole period. Their profit is only £485 on Income £30k

They have been filed at companies house but no CT return was done. Now HMRC have written (naturally) requesting same.

Clearly two CT returns will be required (assuming the company was not dormant at the outset) One from July-August 2012, the second Sep 12 - August 13.

Is it reasonable to pro-rata income and costs from the existing accounts? - which I believe are accurate

Will a re-filing to Cos house trigger a late filing penalty?

Should I let the 425 days accounts lodged at Cos house stand-there will be an additional creditor; me.

Any thoughts welcome.

Replies (13)

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By johngroganjga
31st Jul 2014 16:48

Yes it's reasonable to time apportion between the two CT periods.

Don't understand your reference to re-filing at CH. What would you be re-filing and why?

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By The Innkeeper
31st Jul 2014 16:52

If you do file

amended accounts at Companies House there will be no penalty.

I don't understand your comment that by incorporating they have lost their charitable status.Many Charities operate via a Limited Co by Guarantee

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By TerryD
31st Jul 2014 16:52

Why did incorporating mean them giving up their charitable status?

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Replying to MDK45:
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By james3
31st Jul 2014 19:40

Because

TerryD wrote:

Why did incorporating mean them giving up their charitable status?

I'm assuming they were an unincorporated charity and decided to (1) set up a company and transfer in the charity's assets and (2) dissolve the unincorporated charity thus giving up charitable status. If they wanted to retain charitable status they would have to register the company as a charity because charitable status cannot be transferred.

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By TerryD
31st Jul 2014 16:55

P.S.

You can't put in a creditor at 31 August 2013 for your fees if you have only just been appointed now.

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Euan's picture
By Euan MacLennan
31st Jul 2014 17:17

And wrong dates

If the company started trading on (say) 15 July 2012, their first CT accounting period and return will be for the year to 14 July 2013 and the second one for the short period from 15 July to 31 August 2013.

But Yes - you time apportion the profits between the two periods and file them both with the one set of accounts for the whole period by 31 August 2014.

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By GuestXXX
17th Mar 2015 17:13

.

 

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the sea otter
By memyself-eye
31st Jul 2014 18:21

don't know why

they gave up their charity status - but they did- I checked on the Charity Commission website. I understand they could have retained this as a company (and they should have done so) but that is not the case.

Thanks Terry D, that answers that question, and I will apportion to the correct accounting dates (instead of working backwards from 31 August 2013 ! )

Thanks everyone.

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Replying to Rweaver:
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By chicken farmer
01st Aug 2014 09:03

But ...
A charity has to apply its assets for charitable purposes only - it cannot transfer those assets to a non-charitable body.

You need to speak to the Charity Commission, don't just look on the website.

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Replying to Moonbeam:
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By james3
01st Aug 2014 09:53

I agree

chicken farmer wrote:
A charity has to apply its assets for charitable purposes only - it cannot transfer those assets to a non-charitable body. You need to speak to the Charity Commission, don't just look on the website.

The CLG would need charitable status before an asset transfer could take place.

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By Alexdon
01st Aug 2014 07:51

Apportioning results

I assume you are not using CT software to complete the CT returns, as if you were the apportionment would happen automatically.

I don't know if the HMRC website service can do this, perhaps someone else on here has experience of it and can enlighten us.

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the sea otter
By memyself-eye
01st Aug 2014 10:46

I looked on the CC website

to check they were reqistered only. They are not. At this stage I have no knowledge of what happened to the charity's assets. I am perfectly aware of the rules concerning charity [***] and yes I will find out where they went - though I think I know what the answer will be..

Be gentle with me folks only got the introduction yesterday afternoon!

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By steve.hughes@seftoncvs
01st Aug 2014 11:13

Check the Mem & Arts becuase

Check the Mem & Arts becuase it could be a case of them retaining their charitable objects in the Mem & Arts in which case they are a charity which hasn't yet registered.

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