The end of Dormant Companies?

Does anticipated legislation remove the status of dormant companies?

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Just allowing my mind to wander further into the land of the compliant - As part of the changes being introduced for filing at Companies House, it will be a requirement for all registered companies to register an "appropriate" company email address.  Given that owning an email address requires a contractual obligation, and will require a commercial infrastructure to receive emails, will this mean that all companies that are currently registered at Companies House as "dormant" or "non-trading" will no longer be able to use either of these as a status? 

Replies (30)

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By paul.benny
31st Jul 2023 13:29

No

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Replying to paul.benny:
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By AndyC555
31st Jul 2023 13:50

I have read and carefully considered the verdict of my learned colleague and agree with his conclusions.

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Scalloway Castle
By scalloway
31st Jul 2023 13:48

How somebody using about using [email protected]?

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By SteveHa
31st Jul 2023 13:48

Quote:
Given that owning an email address requires a contractual obligation

Since when. I have three email addresses which I host my own server. I have no contract with anyone to do this.

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Replying to SteveHa:
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By gillybean04
31st Jul 2023 17:15

I suppose they're technically correct, you can't own it without having a contract.

I suppose the email addresses are linked to the domain and you don't own a domain. You just licence it.

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Replying to gillybean04:
RLI
By lionofludesch
31st Jul 2023 17:32

gillybean04 wrote:

I suppose they're technically correct, you can't own it without having a contract.

I suppose the email addresses are linked to the domain and you don't own a domain. You just licence it.

Does it have to be the company's email address or will a director's address suffice?

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Replying to lionofludesch:
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By Hugo Fair
31st Jul 2023 19:56

".. will a director's address suffice?"
Yup, but it doesn't even need to belong to a Director!

The requirement is that " .. emails sent to it by the registrar would be expected to come to the attention of a person acting on behalf of the company."

So 'acting on behalf of' (could be company secretary, in-house accountant, etc) AND 'expected to come to the attention of' (which could mean using a generic email like [email protected] that has nothing directly tying it to a person let alone the company, so long as there is an in-house procedure for someone to check and disseminate emails received at that address).

This is a NON topic.

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By nrw2
31st Jul 2023 14:11

Who says you have to use a company email address rather than a personal one, or one provided by another company?

Many people have many more shareholdings / directorships than email addresses.

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Replying to nrw2:
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By johncmartin
31st Jul 2023 15:25

https://publications.parliament.uk/pa/bills/cbill/58-03/0205/220205.pdf:

“Registered email address
88A Duty to maintain a registered email address
(1) A company must ensure that its registered email address is at all times
an appropriate email address.
(2) An email address is an “appropriate email address” if, in the ordinary
course of events, emails sent to it by the registrar would be expected to
come to the attention of a person acting on behalf of the company.
(3) If a company fails, without reasonable excuse, to comply with this
section an offence is committed by—
(a) the company, and
(b) every officer of the company who is in default.
(4) A person guilty of an offence under this section is liable on summary
conviction—
(a) in England and Wales, to a fine;
(b) in Scotland or Northern Ireland, to a fine not exceeding level 5
on the standard scale and, for continued contravention, a daily
default fine not exceeding one-tenth of level 5 on the standard
scale.

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Replying to johncmartin:
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By Hugo Fair
31st Jul 2023 15:57

".. if, in the ordinary course of events, emails sent to it by the registrar would be expected to come to the attention of a person acting on behalf of the company"

.. does not come even close to your:
"Given that owning an email address requires a contractual obligation."

As well as being a false piece of logic (one can have an email address without incurring any sort of contractual obligation), your interpretation fails to take account of your extract which clearly states that it only needs to 'be expected to come to the attention' of a relevant person (nothing to do with being owned or contracted by the company).

What lies behind your question (there has to be more than you've set out just to be worth posting the question)?

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paddle steamer
By DJKL
31st Jul 2023 14:25

What does "appropriate" mean in this context?

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By lionofludesch
31st Jul 2023 15:46

I vote no.

Though I haven't grasped the advantage of the dormant company since FRS105 came into force.

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By johncmartin
31st Jul 2023 18:11

I thank all responders. This was just a mind-wander, in anticipation of Companies House becoming yet another penalty raising regime for non-compliance to further legislation.

As a regular reader on this forum, it is abundantly clear that the individuals on here that are supervised by their respective professional bodies have a blinkered insight into the coercive nature of the current tranche of legislation, compared to those supervised by HMRC.

The ability to use personal judgement in something like a "risk assessment", that can later be criticised as inadequate by a supervising body, is the same as Companies House's new ability to provide its own interpretation of "appropriate".

Whilst I applaud the attempt to improve the integrity of data held at Companies House, which is decades overdue, I can see the Treasury licking its lips at the by-product - the opportunity for further fund raising, all in the name of coercion towards compliance.

Regardless of FRS 105, there are over 700,000 dormant companies registered at Companies House. Do the maths and follow the money.

Domains have to be bought, and that constitutes a transaction. Agents will have to be registered with Companies House in order to submit on behalf of another party. I doubt very much that there will be no administration charges for registering as an agent.

Perhaps my mind is wandering too far now, for which I can only apologize. No more comments necessary.

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Replying to johncmartin:
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By lionofludesch
31st Jul 2023 19:41

Yeah - but if dormant companies aren't allowed, companies will just file FRS105 accounts which will say the same as dormant accounts. No improvement to information available to the public.

Why do you think there'll be more published information?

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Replying to lionofludesch:
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By johncmartin
31st Jul 2023 22:12

https://www.gov.uk/government/publications/economic-crime-and-corporate-...

"4. How will filing requirements for small companies and micro-entities change?
The government will streamline the existing filing framework for small and micro entity companies.

Rather than having the filing obligations for small companies and micro-entities within the same section of the Companies Act 2006, the Bill splits the requirements into two sections, which aims to make the filing requirements clearer for companies to understand.

Under the new rules, micro-entities will be required to prepare annual accounts in accordance with the requirements of section 396 (which requires the preparation of a profit and loss account), but the amendments retain the option for micro-entities to not prepare a directors’ report. Similarly, the amendments to the small companies filing requirements require the preparation of annual accounts in accordance with section 396. However, a small company will be required to file its profit and loss account and directors’ report. This will ensure that key information such as turnover is available on the public register. The changes will also remove the option for companies to prepare abridged accounts.

These amendments will make the filing requirements easier to understand, reduce fraud and error, and improve transparency."

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Replying to johncmartin:
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By lionofludesch
31st Jul 2023 22:36

And if the company is genuinely dormant, what will be in the profit and loss account?

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Replying to johncmartin:
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By paul.benny
01st Aug 2023 09:10

My I refer you again to my closely reasoned response at the start of this thread.

Beyond a formal statement to confirm that a company qualifies as dormant, the factsheet referenced does not mention dormant companies. There are specific provisions in CA2006 for dormant companies, although the term itself is not defined. CH defines dormant as having no significant accounting transactions. The confirmation statement fee is explicitly excluded.

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Replying to paul.benny:
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By lionofludesch
01st Aug 2023 09:26

I concur. And I reiterate my view that dormant accounts have no advantages whilst FRS105 is in effect in its current form.

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Replying to lionofludesch:
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By johncmartin
01st Aug 2023 15:41

"my view that dormant accounts have no advantages whilst FRS105 is in effect in its current form"

The whole point is that the process to change the current form has now been started (in my opinion).

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Replying to johncmartin:
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By lionofludesch
01st Aug 2023 18:11

johncmartin wrote:

"my view that dormant accounts have no advantages whilst FRS105 is in effect in its current form"

The whole point is that the process to change the current form has now been started (in my opinion).

In my opinion, it started about eight years ago.

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Replying to paul.benny:
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By paulwakefield1
02nd Aug 2023 14:00

paul.benny wrote:

...dormant companies, although the term itself is not defined.

S1169 CA2006 provides the definition.

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Replying to johncmartin:
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By jline199
02nd Aug 2023 14:23

"Domains have to be bought, and that constitutes a transaction." I think a confusion there between a domain and an email address. No need to register a domain to get an email address, given the availability of gmail, hotmail and the like.

"Agents will have to be registered with Companies House in order to submit on behalf of another party."

If the Agent is Company Secretary of a company, they would surely have the ability to submit on behalf of a company.

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Replying to jline199:
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By lionofludesch
02nd Aug 2023 15:05

jline199 wrote:

If the Agent is Company Secretary of a company, they would surely have the ability to submit on behalf of a company.

Indeed, a duty.

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By JCresswellTax
01st Aug 2023 10:09

Wow, the award for overthinker of the year goes to...

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Replying to JCresswellTax:
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By johncmartin
03rd Aug 2023 10:33

"Wow, the award for overthinker of the year goes to..."

Definitely the most favoured response - a sincere thank you.

My visits to this forum are usually for three things: to gain knowledge from betters, of which there are more than there are not; to understand different perspectives; to be entertained.

This small pebble in the pond has brought all three.

The contributors that have provided the links to current legislation are appreciated. The number of responses that have only looked at the here and now explain why the industry is always caught with its trousers down. It never ceases to surprise me how righteous some commentators are, but that is the balancing agent that enlightens the personal perspective. The occasional snippets of humour and wordplay always make the visits worthwhile in an otherwise soulless day.

I can only wonder how Darwin felt about the ridicule that reigned on him when he first suggested his theory of evolution, or how Orwell could possibly conceive the storylines to any of his literary insights into governmental and social influences. My twilight years are less comforting than I envisaged.

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Replying to johncmartin:
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By johncmartin
03rd Aug 2023 11:47

"ridicule that reigned on him"

I know, rained spelt wrong . . .

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By dmmarler
02nd Aug 2023 11:14

Companies House wants to get rid of all the dormant company clutter AND contact companies electronically only (cost saving). However, what concerns me is that there is no guarantee emails sent equals emails received as there are too many third parties and unknowns involved. Or perhaps this is heralding the demise of Royal Mail?

There is nothing to stop anyone setting up a free email address for the purpose of Companies House emails, as long as the inbox is monitored. So no problem.

As a general observation - most dormant companies are in large groups where this sort of dormant company overhead cost is covered in house and not charged to the individual companies. Many of them are being kept for tax reasons ... or part of complex ownerships too difficult to unwind. They will be looked after by the group company secretariat.

Why don't we return to the old system of having a Company Secretary who is responsible for this sort of admin? It did make life a lot easier.

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Replying to dmmarler:
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By Hugo Fair
02nd Aug 2023 13:45

"Or perhaps this is heralding the demise of Royal Mail?"

C'mon keep up ... Royal Mail plc has already been renamed 'International Distributions Services plc' as of 5 Oct last year! :=)

But I agree with the rest of it - particularly the use of a Co Secretary.

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By Yossarian
03rd Aug 2023 11:14

Does this really change anything anyway? Companies have always been required to have a physical postal address. In a similar vein you could argue that access to a physical postal address requires some form of 'contract' between the company and the owner of the property whose letter box the company uses to receive mail? Therefore no company has ever been truly dormant...

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Replying to Yossarian:
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By lionofludesch
03rd Aug 2023 11:34

Yossarian wrote:

Does this really change anything anyway?

No. Made up problem.

Even if they aren't dormant, work on FRS105 accounts is the same and I would charge exactly the same fee.

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