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Dormant accounts or micro-entity accounts?

Which to submit using vt software

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I have a client whose business has not traded for several years. They had a number of small transactions going through the business bank account until a couple of years ago when they finally got round to closing the business account, and so micro-entity accounts were filed as the company didn't meet the conditions for dormancy with Companies House.

The company now meets the dormany conditions - it is not trading and a couple of very minor expenses have been paid by the director so there are no "significant transactions" to report.

I use vt software and if I choose the "dormant accounts" option this includes a statement  that "The accounts have been prepared and delivered in accordance with the special provisions applicable to companies subject to the small companies regime." These accounts include an exemption from audit statement.

However, if I choose the "micro entity accounts" option but click "dormant" on the properties section I get an error message when trying to submit to Companies House that the accounts need to include a statement that the company is exempt from audit.

I'd prefer to submit dormant accounts, rather than submitting micro entity accounts and not ticking the dormancy option as this seems incorrect, but not sure if this is acceptable given that the dormant accounts refer to the small companies regime and I have previously submitted micro-entity accounts for this company.

Any advice would be appreciated as I feel I may be over-thinking this!

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By hfiddes
14th Jul 2021 11:16

You say a couple of minor expenses have been paid by a Director. Without knowing what they are, its difficult to advise. The Companies Act 2006 defines exactly what insignificant means in s1169(3). If these expenses aren't listed there then it will be difficult to argue dormancy because size or numbers don't matter - if it is a transaction that needs to be recorded in the company's accounting records (s386), its not dormant. Finger in the air test (not foolproof) was a receipt or invoice addressed to the Company or sent with the Companies address on it?

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By sparkler
14th Jul 2021 12:06

Thank you, that is helpful. The only expense in the financial year is the submission of the confirmation statement to Companies House (this is listed as one of the disregarded items in section 1169).

In the previous financial year, there was a small accountancy fee but in that year microentity accounts were submitted - i.e. the company was not considered dormant.

So I am confident that the company does meet the conditions for dormancy in the current financial year.

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By vtsoftware
14th Jul 2021 11:47

If you use the dormant accounts template, the 'Company is dormant' tick box must be ticked. If you use the micro-entity template, the 'Company is dormant' tick box must not be ticked (these are the default settings). Arguably, we should not have made it an option.

If a company is legally dormant, you can use the dormant accounts template regardless of the type of accounts that were previously filed.

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By sparkler
14th Jul 2021 12:07

Thank you for your response. It would certainly be worth "greying out" the dormancy box on the microentity accounts if this cannot be ticked, to avoid any confusion for users of VT software!

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