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CBS setting up, not yet trading. Is it dormant?

A lot of bank transactions made in the first period, but no trading conducted. What do I report?

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This is giving me a headache.

I have a Community Benefit Society client registered with the FCA that is going to brew beer.  Given problems due to c***d they've not been able to develop a product or make any beer, or sell any beer. The C word has really dropped a bomb on the lead times for everything.  They have received grants for equipment, which they have started buying, and there's been quite a bit of spending on expenses and development. Other people's beer has been sampled.  They use the company bank account.

The first period from registration is 18 months from October 2019 to March 2021, and we're now in September 2021 and we have no product to sell yet, with a likely start of trading around January 2022 with a fair wind.  Plenty has happened up to March 2021.

Do I submit dormant accounts for this first period? Being used to generally dealing with ongoing work, this kind of limbo period causes me all kinds of cognitive dissonance.  We're definitely not trading, but at the same time there are significant transactions. Does being a CBS affect this in any way? The Society will be exempt from audit.

Grant income is going to be matched to expenditure so shouldn't generate a profit.

In terms of reporting activity we can describe that on the AR30.

In terms of Corporation Tax HMRC will also need to have information, but all pre-trading transactions would hit at the beginning of the trading period.

This is making me ill, so if anyone could kindly and clearly set out my proper course that would be very much appreciated.  All online searches seem to use examples that don't fit with my situation. They are always too simple, to illustrate a point, rather than meatier, to demonstrate the full implications of rules.

 

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By David Ex
19th Sep 2021 21:20

stevebritgimp wrote:

This is making me ill, 

Not worth your health. If you don’t know about the peculiarities of the sector, I would suggest you just pass it to someone else. Assume the fees aren’t great for this type of thing.

https://www.icaew.com/library/subject-gateways/business-management/busin...

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RLI
By lionofludesch
20th Sep 2021 07:32

There's a confusion here caused by HMRC using the word "dormant" to mean something different to what Companies House means.

Companies House dormant means absolutely no transactions at all, subject to a few exceptions. So if you pay a debt to an existing creditor, for instance, you're not dormant.

HMRC dormant means no trading.

If thus stuff worries you, I agree with my learned colleague that you need to pass this on to someone with experience of the relatively uncommon trading vehicle you have chosen.

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Replying to lionofludesch:
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By stevebritgimp
20th Sep 2021 10:13

lionofludesch wrote:

There's a confusion here caused by HMRC using the word "dormant" to mean something different to what Companies House means.

Companies House dormant means absolutely no transactions at all, subject to a few exceptions. So if you pay a debt to an existing creditor, for instance, you're not dormant.

HMRC dormant means no trading.

This is the nub of it. So my question remains what actually happens? For example is that difference just handled by tax computation adjustments? This question arose on this site in 2015, but no actual final answer emerged.

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Replying to stevebritgimp:
RLI
By lionofludesch
20th Sep 2021 11:31

stevebritgimp wrote:

lionofludesch wrote:

There's a confusion here caused by HMRC using the word "dormant" to mean something different to what Companies House means.

Companies House dormant means absolutely no transactions at all, subject to a few exceptions. So if you pay a debt to an existing creditor, for instance, you're not dormant.

HMRC dormant means no trading.

This is the nub of it. So my question remains what actually happens? For example is that difference just handled by tax computation adjustments? This question arose on this site in 2015, but no actual final answer emerged.

It's not rocket science. It's likely from what you say that you are dormant when dealing with HMRC but not dormant when dealing with Companies House. There is, actually, no conflict.

It's carp that they've decided to use the same term to mean different things (they didn't always) but that's the standard of joined up thinking at the Government these days.

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Replying to stevebritgimp:
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By Paul Crowley
20th Sep 2021 12:03

Not trading (HMRC) means that no tax return should be required
If submitted it should be nil
There is a trap as HMRC CT600 needs extra pages to the usual pages if charitable status being claimed

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Replying to Paul Crowley:
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By stevebritgimp
20th Sep 2021 12:19

Yes, I understand all that guys - that's what I've put in my question. I'm not going to be doing a CT600 for the first period. But I have expenses/losses for that period, that I can't carry forward from nowhere, and will have to go in the following period. So is that a Tax Computation matter?

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By Paul Crowley
20th Sep 2021 09:08

Agree both
I now have none
They always took more time than was warranted by the fee
The accounts always word and excel mix
Just more trouble than they are worth
Operated by volunteers who think they should be treated as if charities when fees are considered

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Replying to Paul Crowley:
Red Leader
By Red Leader
20th Sep 2021 12:13

"Oh and could you attend the AGM, please? We think it would be useful in case people have any questions."

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Replying to Red Leader:
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By stevebritgimp
20th Sep 2021 12:17

Red Leader wrote:

"Oh and could you attend the AGM, please? We think it would be useful in case people have any questions."

Oh, yes - have already been there - but it is just Zoom meetings presently.

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Replying to Red Leader:
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By Paul Crowley
20th Sep 2021 16:26

but only the part of the AGM that deals with accounts
Then leave please.......
Followed by decisions that would be better made with good advice

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By More unearned luck
20th Sep 2021 13:33

Since beer brewing leads to beer drinking which in turn leads to drunkenness, rowdiness, fights, littering, weeing in the street, drink driving, beer bellies, late-night consumption of doner kebabs, hangovers, long term health problems, etc how does brewing beer benefit the community? Payment of beer duty and spending profits on Good Causes hardly makes amends.

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Replying to More unearned luck:
paddle steamer
By DJKL
20th Sep 2021 14:15

It also reduces the state pension bill by killing a few people before they draw too much pension, half the problem with our NHS is their interfering trying to preserve life, this reduces the mortality rate thus inflating future NHS and care costs,.

Any civilized society would actually provide free alcohol and drugs to all those who have retired. (Mind you, fighting pensioners is a frightening thought)

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Replying to More unearned luck:
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By I'msorryIhaven'taclue
20th Sep 2021 14:31

More unearned luck wrote:

Since beer brewing leads to beer drinking which in turn leads to drunkenness, rowdiness, fights, littering, weeing in the street, drink driving, beer bellies, late-night consumption of doner kebabs, hangovers, long term health problems, etc...

It doesn't do blokes much good either!

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