Dormant company question

Depreciation in a compant that has ceased trading

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Hi All,

A new client of mine has ceased trading and informed HMRC thus. For the year ending 31/3/17, he did zero trading. 

HMRC is fine with no accounts being filed.

Companies House however requires a set of dormant accounts posted and filed

Question: should I post the depreciation for the year?  Likewise the debtors need to be written off. All of this will generate a loss in the dormant year. 

And if I do all of this, are they classed as significant transactions meaning filing with HMRC and revoking the dormant status?

 

Thanks in advance

Replies (19)

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By johngroganjga
13th Dec 2017 15:49

You say "Companies House however requires a set of dormant accounts posted and filed" but I think you have included the word "dormant" in error.

Companies House always require accounts. It is for those preparing and filing those accounts to decide what is in them, not for Companies House.

If you are an accountant you will know how to prepare accounts. Whether you need to send them to HMRC depends on what is in them.

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Replying to johngroganjga:
accountant
By tljenkin007
13th Dec 2017 16:14

Yes the word "dormant" was in error. You didnt answer the question, so I ask again, does movements in debts and NBV class as significant transactions from an HMRC standpoint, triggering accounts to be filed and nulling the "Dormant" status?

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Replying to tljenkin007:
Flag of the Soviet Union
By thevaliant
13th Dec 2017 16:23

Bit shirty with John but yes.

A company is only dormant if it has either no transactions at all, or one of three exempt kind of transactions:

1. Payment of the companies house fee
2. Issue of shares
3. Dividends received and immediately then dividend itself further up the corporate tree

Given it will have bad debts to post and fixed asset depreciation to charge it cannot be dormant.

NOW you should've asked if it was non-trading, which is not the same thing.

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Replying to thevaliant:
accountant
By tljenkin007
13th Dec 2017 16:34

It is non-trading and my client has already informed HMRC months ago it is a dormant company

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Replying to tljenkin007:
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By andy.partridge
13th Dec 2017 18:22

Why did your client do that? On your advice?

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Replying to andy.partridge:
accountant
By tljenkin007
13th Dec 2017 18:31

Not at all, previous accountant I guess

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Replying to tljenkin007:
By johngroganjga
13th Dec 2017 16:30

I did answer the question, which was that whether you should submit the accounts to HMRC would depend on what was in them - in particular income or gains, or a loss that you want to claim relief for.

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Replying to johngroganjga:
accountant
By tljenkin007
13th Dec 2017 16:36

Non trading and HMRC was informed it was a dormant company. My view is making adjustments to the accounts which is needed will mean I have to file with HMRC. CH is a given

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By Marion Hayes
13th Dec 2017 16:57

What do you need the Company for going forwards?
Apply for it to be struck off and CH requirements disappear?

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Replying to Marion Hayes:
accountant
By tljenkin007
13th Dec 2017 17:02

Client has already been adviced that way, this is how they want it!

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Replying to tljenkin007:
Oaklea
By Chris.Mann
14th Dec 2017 13:54

Some further free “advice”, while you’re in the mood, it “advised” not adviced (sic).

There are some worldly wise members on this forum and, they provide, professional opinion, absolutely free of charge. If you’re unable to demonstrate a modicum of humility, you will receive a suitable response.

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Replying to Chris.Mann:
accountant
By tljenkin007
14th Dec 2017 14:33

Thank you kind sir and a Merry Xmas to you too!

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Replying to Chris.Mann:
accountant
By tljenkin007
14th Dec 2017 14:33

Thank you kind sir and a Merry Xmas to you too!

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Stepurhan
By stepurhan
13th Dec 2017 17:22

On the (scant) information in your OP, there would actually appear to be an advantage to filing with HMRC.

But since you've decided to cop an attitude on a forum where you are getting answers for FREE, I will leave it to you to work out what that is.

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Replying to stepurhan:
accountant
By tljenkin007
13th Dec 2017 17:46

Don’t see attitude anywhere but apologies if I come across that way to all who replied on here. My client has been adviced of the tax implications of filing with HMRC this year and I’m going ahead with a Corp return, would help out some when they do start trading again. Thanks anyway for your help!

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Replying to tljenkin007:
paddle steamer
By DJKL
14th Dec 2017 09:57

Are you sure?

I would have thought cessation of trade in YE 31.3.17 might well lapse any trading losses.

If there are to be unused losses ,and client is intent on trading in the future ,I would likely rather have been looking at ways to possibly argue the trade continued, accordingly I would certainly not even consider "non submssion" to HMRC in such a scenario, it sinks any argument, however poor, I might possibly have had.

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Replying to DJKL:
accountant
By tljenkin007
14th Dec 2017 10:18

Quite correct! Brilliant point! Thank you

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By bernard michael
14th Dec 2017 10:10

Just a moot point. Wouldn't your fee be classified as a transaction ?

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Replying to bernard michael:
accountant
By tljenkin007
14th Dec 2017 10:20

My client closed his business bank account in July 2015. He is paying this out of pocket which is incredibly bizarre. Not helping the trading loss position . Sigh!

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