LTD Company Dilemma

LTD Company Dilemma

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Hi

Been approached by a client who set up a limited company in August 2010. HMRC have the company down as being dormant - seen very recent letter to prove this.

However, the company has been trading and has a bank account, etc.

Annual return and annual accounts are now due by companies House.

The client is insisting that the previous accountant completed the CT41G and didnt realise that the company has dormant status with HMRC.

The client is wanting to submit the annual return and dormant company accounts and then register the company with HMRC for corporation tax from 01 October 2011.

Will this cause problems, i.e. will this be picked up by any of the relevant parties- companis house, HMRC, bank, etc.

Any feedback will be much appreciated.

Regards

a_m

Replies (17)

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By blok
06th Sep 2011 09:41

.

I am not sure what you are trying to achieve.

The company must prepare accounts and file a tax return and comply with companies house.

The fact that HMRC think the company was dormant is irrelevant. You need to tell them otherwise.

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By thisistibi
06th Sep 2011 09:46

Not a problem

It doesn't matter that HMRC think the company is dormant.  When you submit your tax return, HMRC will amend the company as not dormant anymore.  Companies house, banks, etc, won't be aware that HMRC have the company down as dormant.

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Euan's picture
By Euan MacLennan
06th Sep 2011 10:04

Eh?

If the company was formed in August 2010, the first Annual Return (listing the registered office, names and addresses of directors and shareholders, SIC code, share details, etc.) must now be filed at Companies House, regardless of whether the company has been trading or not.  The Annual Return is not connected to the accounts in any way.

If the company was formed in August 2010, its default first accounting date is 31st August 2011, but you could extend it to 30th September or 31st December 2011.  The accounts will need to be filed at Companies House by sometime in May 2012.

If the company has transactions, you cannot file dormant accounts - form DCA.  Prepare normal accounts to the chosen date.

Notify the CT district now of when the company started trading.  You will then have a first CT accounting period starting then and ending with the accounting date or if you have extended the company's first accounting date, you might have 2 CTAPs - one for the first 12 months of trading and the other for the balance up to the accounting date.  You will have until 12 months after the accounting date to file the CT600 (or 2 CT600s), but any tax will be payable 9 months after the end of each CTAP - all the dates will be well into 2012.

There is no dilemma.  It is all very straightforward.  If the client insists on filing dormant accounts when he has been trading, don't act for him.

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Universe
By SteveOH
06th Sep 2011 11:52

I'm also a bit mystified

The client is wanting to submit the annual return and dormant company accounts and then register the company with HMRC for corporation tax from 01 October 2011.

What does your client intend to do about the period of trading prior to 1st October 2011?

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Giraffe
By Luke
06th Sep 2011 13:24

Unless I'm mistaken

client is wanting to pretend the last year never happened and not bother paying tax or doing accounts for it.

There is no dilemma involved there for me, either they play by the rules or it is a money laundering reporting issue isn't it?

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Replying to telfordaca:
Image is of a pin up style woman in a red dress with some of her skirt caught in the filing cabinet. She looks surprised.
By Monsoon
06th Sep 2011 13:47

sounds dodge!

Luke wrote:

client is wanting to pretend the last year never happened and not bother paying tax or doing accounts for it.

There is no dilemma involved there for me, either they play by the rules or it is a money laundering reporting issue isn't it?

That's what it sounds like to me too.

Either they file accounts and corporation tax returns as they should for trading periods, or you file a MLR report and cease to act.

They can't just pretend the first year didn't happen.

On a side note, I've heard more than a couple of times from clients who believe that a business doesn't have to pay tax in the first year. Seriously. Got to love that man down the pub.

 

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By a_m
06th Sep 2011 14:53

Thanks - wont be accepting appointment!!

Hi - thanks for all your feedback. I think I will steer clear from this one. Client has contacted me to ask if he can dissolve the company and start again!!!

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Euan's picture
By Euan MacLennan
06th Sep 2011 15:25

Don't forget

... to file the MLR suspicious activity report.

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By a_m
07th Sep 2011 15:36

Client has come round.....

Thank you all for your advice, which I have discussed with the client.

Basically he wants to do things the right way - so will I phone HMRC Corporation Tax office and/or just send in a completed CT41G with the trading date as being the same as the date of incorporation.

Will this not lead to more questions being asked?

Thanks once again.

 

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Universe
By SteveOH
08th Sep 2011 16:02

You're making this much more complicated than it need be

Euan gave an excellent answer as to the what is due and when. It is good that your client wants to do "the right thing". Essentially the procedure is:

Phone HMRC and tell them the date of commencement of trading. Don't tell them it's the date of incorporation; because that's not true. Give them the date that your client actually started trading.The Annual Return is overdue at Companies House. Complete that and send it in.The first Accounts are not overdue. The first period, assuming you have not changed the Accounting Reference Date, is to 31st August 2011. That period will presumable be mostly non trading. Complete those accounts and submit them.

I'm not sure why you ask in your last post, "Will this not lead to more questions being asked?"

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By a_m
08th Sep 2011 16:16

Thanks...

I have now notified HMRC - the start date of Trading was a little bit after incorporation - 01 September 2010.

I was just worried if HMRC would ask why the client didnt notify earlier, etc and delve into the directors history, etc.

Thanks for your guidance.

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By pauljohnston
09th Sep 2011 11:29

CT41g

If this was not submitted your client may be in for £100 penalty.  I suggest you carry on as mentioned very clearly above and wait and see

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By a_m
19th Sep 2011 15:53

Which CT Accounting Period do I Select...

Hi All

First of all many thanks for all your help and guidance on this.

I sent in the CT41g with a start date of trading of 01 September 2010.

The client is now on my HMRC client list and I am attempting to file CT return - however, I am confused as to which accounting period to select between the two following options:

17/08/10 (date of incorporation) to 31/08/11

01/09/10 (start of trading) to 31/08/11

Which should I select or do I have to do both and what are the implications for Companies House - this is my first ever CT return.

Many Thanks

a_m

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Euan's picture
By Euan MacLennan
19th Sep 2011 17:19

There is only one CTAP

The company does not have a CT accounting period until it starts trading.  The only CT return required is for the first year of trading ended 31 August 2011.

 

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By a_m
20th Sep 2011 09:28

Thanks - What is the other date for?

... is the other date to take advantage of filing to companies house at the same time.

Will selecting 01/09/10 (start of trading) to 31/08/11 be ok for companies house as date of incorporation was earlier.

I am probably thinking too much into this!!!

Thanks

a_m

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By accountright
20th Sep 2011 09:55

check the dates

I believe if you check the dates you will find the period beginning 17/08/10 ends on 31/08/10 not 31/08/11 as in your earlier post.  The system defaults from the date of registration so that a 12 month period is covered for the normal year end dates.  

I usually call the relevant Corporation Tax Office to let them know the date the Company started trading so that they can note on the file not to expect anything for the dormant period (i.e 17/08/10 to 31/08/10)

Polly

 

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By a_m
20th Sep 2011 10:04

Thanks Polly - I feel so daft!!!

Just logged onto HMRC online services and yes it is from incorporation to 31/08/11, i.e. dormant period.

As per your advice, I will notify the CT office accordingly.

Thanks once again.

a_m

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