Accounts and audit exemption

What does 'no significant accounting transactions' mean?

A company is dormant if it has had 'no significant accounting transactions' during a financial period. When considering whether a company is dormant you can disregard the following financial transactions:

• Payment for shares taken by subscribers who agreed to take such shares under the memorandum of association.
• Fees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns.
• Civil penalties imposed by the Registrar of Companies for delivering accounts to the Registrar after the statutory time allowed for filing.

What exemption is available?

Dormant companies that are eligible and wish to take advantage of it can claim exemption from audit.

• Private companies that are dormant need only prepare and deliver to Companies House an abbreviated balance sheet and notes. A profit and loss account and directors' report do not have to be included in dormant company accounts filed at Companies House. A directors' report and possibly a profit and loss account, if the company traded in the previous financial year must also be provided to members.
• Public companies that are dormant must prepare and deliver to Companies House a balance sheet and notes, directors' report and possibly a profit-and-loss account, if the company has traded in the previous financial year.

Provided the accounts are prepared so that they comply with the requirements, they do not have to be drawn up by a professional accountant. However, if you are in any doubt about how to prepare a set of accounts, an accountant will be able to advise you.

Companies dormant since incorporation

By definition, these companies can only have entered into the following financial transactions:

• The issue of shares to subscribers who agreed to take such shares under the memorandum.
• Fees paid to the Registrar of Companies for a change of company name, the re-registration of a company and filing annual returns.
• Late filing penalties imposed by the Registrar of Companies.

Companies that have become dormant

These companies must be dormant for the current financial year, but will have entered into transactions in earlier periods. These transactions may have resulted in residual balances appearing on the balance sheet in the current year.

• Authorised share capital - the maximum number and nominal value of shares the company is allowed to create under the terms of its memorandum.
• Issued share capital - the number and nominal value of shares actually issued to shareholders.
• Called-up share capital not paid - the value of shares (generally that means the nominal value) that the company has issued without receiving payment.
• Shares allotted during the year - the number of new shares allocated to members in the financial year.
• Aggregate nominal value - the total face value of all the shares allotted.
• Consideration received - the actual amount received for the shares.

How much time do I have to deliver dormant accounts to Companies House?

Usually 10 months after the accounting reference date. But this can be different for the first accounts and if the accounting reference date has been changed during the year.

Before you send your accounts to Companies House, check that:

• Quoted the correct company number and company name.
• Dated the balance sheet.
• Included all the relevant figures for the current and the previous year.
• Included all the dormant company statements.
• Stated when the accounts were approved.
• Had the balance sheet signed by a director below all the statements.