Shares fully paid up but want dormant company

Do I need to pay for fully paid up shares and how doe I do this if the company has no bank account?

Didn't find your answer?

I have just incorporated a Holdco and Opco. The Holdco owns intellectual property and 100% of Opco. The Holdco does not need to make any transactions so I am considering making it dormant.

However, Companies House notes a statement of capital following allotment of shares. I had 50 shares at £1 and my business partner has 50 shares at £1.

My Articles of Association state that "all shares must be fully paid up" but goes on to state "this does not apply to shares allocated at formation to subscribers of this memorandum".

Do I need to pay for these shares now and if the company is dormant without a bank account how do I do this correctly. For example, keeping cash on the premises (£100) and putting it on the balance sheet as cash in hand?

Any assistance is greatly appreciated!

Josh

 

Replies (30)

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RLI
By lionofludesch
21st Jan 2021 23:06

Who's coming to check the company's cash in hand ?

How will anyone know from your accounts whether the cash is in the bank or the petty cash tin ?

Receiving money for shares does not mean that your company isn't dormant.

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Replying to lionofludesch:
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By Tax Dragon
22nd Jan 2021 06:11

However, acquiring (and exploiting?) assets including IP may.

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Replying to Tax Dragon:
RLI
By lionofludesch
22nd Jan 2021 06:44

I still don't get why folk are so anxious to be dormant.

FRS 105 accounts are pretty much dormant accounts.

Josh - tell us why you want a dormant company. What's your plan ?

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Replying to lionofludesch:
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By Paul Crowley
22nd Jan 2021 08:56

Plan is not to use an accountant

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Replying to lionofludesch:
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By Jbnewbie
22nd Jan 2021 09:56

The holding company was setup so I could assign some IP I was working on to it (for protection purposes) and this is being licensed to the Opco (can be licensed at no cost) to exploit.

The holding company is there only to protect IP so I was thinking about making it dormant if permitted.

Many thanks

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Replying to Jbnewbie:
RLI
By lionofludesch
22nd Jan 2021 10:04

Quote:

The holding company was setup so I could assign some IP I was working on to it (for protection purposes) and this is being licensed to the Opco (can be licensed at no cost) to exploit.

The holding company is there only to protect IP so I was thinking about making it dormant if permitted.

Many thanks

Dormant for HMRC purposes or dormant for Companies House ?

Confusingly, they now use the same word to mean different things. Folk might be answering a question you didn't intend to ask.

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Replying to lionofludesch:
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By Jbnewbie
22nd Jan 2021 10:11

Dormant for HMRC purposes as I don’t intend this company to have any financial transactions. However, I can’t see the distinction between being dormant at Companies House and HMRC for a small company.
Much appreciated

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Replying to Jbnewbie:
RLI
By lionofludesch
22nd Jan 2021 10:28

Quote:

Dormant for HMRC purposes as I don’t intend this company to have any financial transactions. However, I can’t see the distinction between being dormant at Companies House and HMRC for a small company.
Much appreciated

HMRC Dormant means not trading and no tax to collect.

Companies House Dormant means absolutely no transactions at all, subject to a handful of exceptions.

So buying an asset of any kind, but just holding it, means you can be dormant for HMRC. But you're not dormant for Companies House. You've bought something.

If you're only interested in HMRC, just tell them you're not trading. If they send you a return form, which they will from time to time, just to check you're still not trading, ask them to withdraw it on the grounds that you're not trading. They have the option of refusing; if they do that, just fill it in with a load of zeroes.

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Replying to Jbnewbie:
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By Paul Crowley
22nd Jan 2021 10:48

There is clearly a transaction
So not dormant for Co house purposes

Who is going to pay dividends to whom?

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Replying to Paul Crowley:
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By Jbnewbie
22nd Jan 2021 10:51

Thanks,

I don’t believe we will be profitable enough in year one to pay the holding company dividends. Hence, I thought it was best to leave it dormant at HMRC with it carrying no financial transactions.

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Replying to Jbnewbie:
RLI
By lionofludesch
22nd Jan 2021 11:46

Just to reiterate.

HMRC dormant - no trading.

CoHo dormant - no transactions.

You can have transactions without trading.

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By User deleted
22nd Jan 2021 05:45

Abuses the anonymous facility then signs off as Josh......

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Replying to User deleted:
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By Tax Dragon
22nd Jan 2021 06:12

It ain't my Josh. Is it yours?

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Replying to User deleted:
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By Paul Crowley
22nd Jan 2021 08:59

Long time since An Anon posting was genuinely within site rules

Co not know why site Mods bother having site rules

Oh yes, just remembered
To slag off the regulars

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Replying to Paul Crowley:
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By Youareatit
22nd Jan 2021 10:04

Slag off the regulars on and offline.

Yet quietly shut this one down.

Not a word, not even privately to say dealt with, but there should be loud and clear on the post as they have done with the regulars.

Not only that, but this one was foul mouthed abusive on 2 separate occasions, days apart, yet his profile is still up.

https://www.accountingweb.co.uk/any-answers/rebate

Wonder exactly what you have to do to be banned, other than be a regular and be accused of not being very 'professional'.

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Replying to User deleted:
A Putey FACA
By Arthur Putey
22nd Jan 2021 09:26

Amazed that such posts get replies at 11pm and 6am!

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Melchett
By thestudyman
22nd Jan 2021 08:53

Diy job if I ever saw one.

If holding company acquires IP, then that is not one of the specified exemptions that the company can be classed as dormant.

Regarding the articles, are you using the model articles? I'm sure you do not need to have the initial shares paid.

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Replying to thestudyman:
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By Tax Dragon
22nd Jan 2021 09:47

But it's probably sensible to anyway (notwithstanding the well-known clause in s424 ITEPA).

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Replying to thestudyman:
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By Jbnewbie
22nd Jan 2021 10:01

The IP was assigned at zero cost from the creators to the Holdco. I plan to license it at zero cost to the Opco to use. Therefore don’t envisage there being any transactions.

A solicitor drafted some model Articles knowing the intentions.

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Replying to Jbnewbie:
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By Youareatit
22nd Jan 2021 10:06

So you were happy to pay a solicitor for his knowledge, yet not an Accountant.

Why are Accountants seen as inferior in this set up ?

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Replying to Youareatit:
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By Paul Crowley
22nd Jan 2021 11:05

Remarkable
co cost £10 to do self

Solicitor then uses not the standard rules and therefore co has to be dealt with differently to other standard companies.
But they are so worth it, but accounts? just need a website and DIY

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Replying to Jbnewbie:
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By Tax Dragon
22nd Jan 2021 10:26

Jbnewbie wrote:

The IP was assigned at zero cost from the creators to the Holdco. I plan to license it at zero cost to the Opco to use.

Hm, but what's it worth? You might be right vis-à-vis the accounts, but be aware that tax can arise based on values as well as/instead of amounts paid. If it's worth £100, no-one's going to care; if it's £100,000, then really you ought to be taking advice. For future reference (if it's too late this time), the ideal time to take advice is while thinking and before doing. If it's too late this time for the ideal, it's still better late than never.

And by 'taking advice' I don't mean asking questions on Aweb.

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Replying to Tax Dragon:
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By Jbnewbie
22nd Jan 2021 10:28

Thank you, I did instruct an accountant who said that at present it was zero value as it has not been commercially exploited and is non patentable. The holding company is only used so clients we hope to acquire aren’t contracting with the IP owner and with a view of us creating value in the future.

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By Paul Crowley
22nd Jan 2021 11:17

WAS THERE ANY POINT IN IGNORING THE RULES AND THE SITE WARNING AND POSTING ANON?

Do not tell me
I am new and could not be bothered to read the rules
Standard Newbie excuse

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Replying to Paul Crowley:
RLI
By lionofludesch
22nd Jan 2021 11:47

Quote:

I am new and could not be bothered to read the rules
Standard Newbie excuse

To be fair, I've been on here for twelve years and I still haven't read the site rules.

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Replying to lionofludesch:
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By Paul Crowley
22nd Jan 2021 12:10

I am sure you would have been advised if you had broken them
How many times have you ignored the Anon site warning?

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Replying to Paul Crowley:
A Putey FACA
By Arthur Putey
23rd Jan 2021 09:34

What is the point of Anon anyway? Most folk use fictional names on here and provide scant and/or fictional profile data.

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Replying to Arthur Putey:
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By Paul Crowley
23rd Jan 2021 10:06

Agree

But being able to read prior questions and answers means replies can be more focused
One person who was posting in plain then chose to go Anon for 2 questions last week and got annoyed when when I pointed out that she must be the 'client' because the question was so basic
Even PMd me to say she was AAT and a payroll manager.

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Replying to Arthur Putey:
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By Tax Dragon
23rd Jan 2021 10:48

Arthur Putey wrote:

What is the point of Anon anyway?

It's a fair question. I think if I found myself posting a question that genuinely merited use of Anon (i.e., per Sift, that included sensitive content) then I would also find myself wondering whether I should be posting it at all. (I hope I never have to put that hypothesis to the test!)

There is one exception. Mental health. There have been some very uplifting threads in which some very brave people have spoken about their struggles. These threads aren't for everyone, but help who they help. If it requires an anonymous post to get the ball rolling, so be it, in my view.

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Replying to Tax Dragon:
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By Paul Crowley
23rd Jan 2021 11:20

I can go with that

But Anon means no reply by Op to keep hidden

zero functional capability for the standard questions

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