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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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.
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.
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.
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?
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?
sounds dodge!
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.
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?"
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
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.
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