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Dormant Company Accounts

A company can file a ‘dormant company account’ if it has no significant accounting transactions during the accounting period. A significant accounting transaction is defined as one which the company should enter in its accounting records.

A dormant company can be exempt from an audit when:

  • it has been dormant since its formation; or
  • it has been dormant since the end of the previous financial year and it meets the following conditions:
  • it is entitled to prepare individual accounts in accordance with the small companies regime;
  • it is not required to prepare group accounts; and
  • it qualifies as a ‘small company’ in relation to that year, or would have qualified as small but for the fact that it is a public company or is a member of an ineligible group and for management companies when the lease does not require an audit.

Ringley scope of accounting services is tailored to assist flat management companies and estate management companies. Often these companies do not own the freehold but are set up to ‘manage’ a development of block of flats. When a Managing Agent is appointed and the company is run through a Client account if it posses the following 3 tests simplified ‘dormant company accounts’ essentially a balance sheet only will be all you need to file at company house.

Test 1: The company has not bought or sold any assets.
Test 2: The company has not received any income in its own right. (Receipt of service charge into a client account on a not for profit service charge scheme does not count).
Test 3: has not traded. If the company operates outside itself by Managing Agents client account and holds no money in a bank account on its own name the test is fulfilled.

Government guidance at www.companieshouse.gov.uk/about/pdf/gba9.pdf confirms that it is the government’s intention that flat management companies should operate in this way.

There are special circumstances when say you buy the freehold you may not be dormant until late year and other occasions when you will have to file ‘abbreviated’ company accounts. Right to Manage (RTM) Companies also need to take care of certain expenses such as directors and office’s insurance and the fees for any company secretary may not be allowable of service charge and therefore be causing the company to trade.

Need more advice?
Ring up and our Final Accounts Team will be able to help.
Call: 0207 428 1975

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