Share this content

Would you file dormant accounts with no proof?

We have no evidence of dormancy and the filing deadline is approaching.

Didn't find your answer?

Hi All,

We have a client who informed us that he has not traded through his limited company and when we asked for proof of bank statements, the client informed us that he never opened a bank account since incorporation and cannot provide us with the records requested.

However, we have no way to check if the company ever had a bank account or not. Can you please advise how you would proceed with filing dormant accounts if you had no evidence. We always worry that a client may deliberately be trying to show the company as dormant to avoid paying the corproation tax liability or worse still drawing monies from the company for personal living.

Is there any other proof that the client can provide us to prove that the company was in fact dormant during the period in question?

Any thoughts will be appreciated.
Thanks in advance for your help.

Replies (14)

Please login or register to join the discussion.

avatar
By sarahg
18th May 2021 10:05

I'm not sure what you want from them - there should be no documents if it is dormant

At the end of the day they are signing off, so get them to sign the DCA before you submit electronically to Companies House

Thanks (1)
avatar
By David Ex
18th May 2021 10:15

Agree with sarahg, you can’t prove a negative like that. However, I can’t see how you can continue to act for someone you apparently have reason to suppose would lie to you and potentially evade tax.

Thanks (0)
avatar
By Paul Crowley
18th May 2021 10:21

How does a director prove a nil?

Thanks (0)
avatar
By Truthsayer
18th May 2021 10:24

You don't need to prove anything, and you can't prove a negative proposition anyway. If the client says the company was dormant and signs the accounts, why would you disbelieve him? You are perfectly entitled to take the client's word unless there is positive evidence that he is lying.

Thanks (0)
avatar
By Tax Dragon
18th May 2021 10:39

You could sneak a quick look at the company's website and FB page etc.

Oh... wait... Mary are you (currently) married to Mr/s Anonymous and think s/he's 'hidden' all his/her assets in a 'dormant' company?

Thanks (1)
RLI
By lionofludesch
18th May 2021 10:47

If the director lies to you, it's not your fault.

Unless you can come up with some evidence that he is trading, say, on a website or Farcebook, you're perfectly entitled to accept his written assurances.

At the moment, you don't seem to have any evidence. Or even a suspicion.

Thanks (0)
Replying to lionofludesch:
avatar
By David Ex
18th May 2021 11:00

lionofludesch wrote:

Or even a suspicion.

The OP has gone to the trouble of finding this site, registering and posting the question. That’s a lot of effort for someone who has no suspicions.

Thanks (0)
Avatar
By I'msorryIhaven'taclue
18th May 2021 10:56

My golf buddy T filed dormant accounts for his one-man company for many years, even though he was busy as a bee and operating out of a sizeable industrial unit. He never let on, and I never mentioned that I'd checked him out at Companies House.

So what surreptitious checks might you perform? How about:

downloading the government's list of furlough recipients to make sure his company's not on it;

search for a company domain. So if his company is XYZ Fishmongers Ltd pop xyzfishmongers.co.uk and .com and variants thereof in your browser bar. Also try searching the register on Nominet's site for variants of the company's name to see who the registrants are. Of course, his email address might already clue you in as to the company's website domain name;

There may be a company Facebook site, or similar social media, so that's always worth a look. For ebay, try a bespoke search (for anything, that is to say a blank search) for sellers within 1 mile of his or his company's postcode;

Perform a string search (within " " speech commas) for each phone number you have for him, and, separately, for any company email addresses / postcode / registered office address / director's name to see what commercial activity you can unearth.

As others have said, it's a bit of a job to prove a negative. But you should trust your gut feeling on this. I take it you're wondering how this director has managed to feed himself this past year, and if nothing stacks up I guess you could always pay a visit to the registered office to see whether there's any signs of commercial activity. I once collared an employee who was on the fiddle just by looking on the dashboard of his van, which served as a repository for his post and invoices and scraps of paper with name and addresses - all manner of useful and damning info, while he was in a pub.

Thanks (1)
paddle steamer
By DJKL
18th May 2021 11:09

Was his company status not discussed when you took him on as a new client?

If not a new client what happened last year?

Thanks (0)
avatar
By Hugo Fair
18th May 2021 12:32

Asked Q: "Is there any other proof that the client can provide us to prove that the company was in fact dormant during the period in question?" - NO.
Unasked Q: Is it possible to prove that the claim of dormancy is a falsehood? - YES, but it could take infinite resources and time (although I'msorry.. has given you a few useful pointers to get you started if you so wish).
Do you have any practical/factual basis that leads to your concern?

Thanks (1)
avatar
By Martin B
18th May 2021 16:11

Just hire Columbo. He will get to the bottom of it in 90 minutes.

Thanks (0)
Replying to Martin B:
Stepurhan
By stepurhan
25th May 2021 12:09

He would do it sooner, but there is always "one more thing".

Thanks (0)
avatar
By WhichTyler
18th May 2021 16:23

If they have never traded and don't have a bank account, how is the company going to pay you?

Thanks (3)
Replying to WhichTyler:
RLI
By lionofludesch
25th May 2021 13:01

WhichTyler wrote:

If they have never traded and don't have a bank account, how is the company going to pay you?

Lots of dormant companies are funded by their directors.

This is a non-objection, is it not ?

Thanks (0)
Share this content