Accounting for Companies House fee?

[Heyes]

For a non-trading company I own, I'm unsure of how best to account for the Confirmation Statement filing fee (£13) which I paid from a personal account (because I'd closed the company bank account before filing annual accounts at Companies House).

My understanding (perhaps incorrect) is that it should be included in my director loan account, and appear as a creditor on the balance sheet...

In which case, I'll have to file amended accounts with Companies House - because when I filed the annual accounts, I'd forgotten about the Confirmation Statement filing fee and so didn't include it in the micro-entity balance sheet.

Obviously, this isn't particularly onerous... but I'm curious about whether there's a different (and legal!) way to account for that filing fee and which doesn't require amended accounts to be filed.

Relevant to this is of course 'don’t attempt your own accounts if you are clueless - pay for some good advice'. So, whilst I'm looking at potential service providers and setting-up initial contact, I'm trying to learn a bit more useful knowledge.

 

[DWS]

Have the accounts been accepted by Companies House?
If so you will need to submit an amended set of accounts on paper, I know this is not the correct thing to say but is it worth it for a £13 transaction

 

[Heyes]

Have the accounts been accepted by Companies House?
If so you will need to submit an amended set of accounts on paper, I know this is not the correct thing to say but is it worth it for a £13 transaction

Thanks.

Yes, they were accepted Nov 2022.
I've only recently realised (as I become more aware of 'accounting') my error.

'Is it worth it?' For peace of mind to me, yes.

 

[DWS]

Thanks.

Yes, they were accepted Nov 2022.
I've only recently realised (as I become more aware of 'accounting') my error.

'Is it worth it?' For peace of mind to me, yes.

Then yes, you have paid for it so it will be in the DLA and then an amended paper set of accounts to Companies House, did you also submit a CT600 to HMRC?

 

[Heyes]

Then yes, you have paid for it so it will be in the DLA and then an amended paper set of accounts to Companies House, did you also submit a CT600 to HMRC?

Thanks.

No on the 'CT600 to HMRC' - the company hadn't traded and so was considered dormant by HMRC and thus not required to file a Corporation Tax return.

 

[Blackford Biz]

You should probably have accrued for it while making final accounts. Now that it's done, it's not a material amount so the tax man won't be interested. I assume you transferred the bank balance into your personal account so the credit against that fee has been received by you already. (Netted off).

 

[Heyes]

You should probably have accrued for it while making final accounts. Now that it's done, it's not a material amount so the tax man won't be interested. I assume you transferred the bank balance into your personal account so the credit against that fee has been received by you already. (Netted off).

Thanks.

My ignorance is such that I'm unable to understand 'accrued for it' and 'netted off'.

And yes, with such a tiny amount I'm sure Companies House won't be bothered and so nothing will come of it.

'I like things to be correct...' I'm nagging myself for getting it wrong - neither the first error I've made, nor likely the last. At least I've learned from it.

 

[DWS]

You should probably have accrued for it while making final accounts. Now that it's done, it's not a material amount so the tax man won't be interested. I assume you transferred the bank balance into your personal account so the credit against that fee has been received by you already. (Netted off).

There’s nothing to ‘accrue’ the confirmation statement was paid for by the OP from his personal account!
What’s missing is the debit to the expense in the P&L and the credit to the DLA.

 

[Heyes]

There’s nothing to ‘accrue’ the confirmation statement was paid for by the OP from his personal account!
What’s missing is the debit to the expense in the P&L and the credit to the DLA.

Ah! Thanks.
That removes the uncertainty I'd mentioned.

 

[nelioneil]

I would not bother to account the fee - I'm quite sure its not tax deductible anyway.

 

[Heyes]

I would not bother to account the fee - I'm quite sure its not tax deductible anyway.

My understanding is that it is an allowable expense, but as the company is dormant for HMRC purposes that's not a concern.

My issue is the desire to file things correctly. I should have thought (and learned more) prior to filing - so that I would have known at the time what I now know.

 

[DWS]

I'm quite sure its not tax deductible anyway.

Why?

 

[Daybooks]

If the company has never traded then you could have filed Form AA02 https://assets.publishing.service.g...ads/attachment_data/file/933649/AA02_V5.0.pdf where it may not have been a requirement to include the filing fee anyway.

You could file amended accounts as per https://www.legislation.gov.uk/ukpga/2006/46/section/454 and in accordance with https://www.legislation.gov.uk/uksi/2008/373/contents

Notwithstanding, one of the concepts and conventions of accounting is that of materiality. Although materiality is subjective the omission is clearly not significant and the amount of effort involved in correcting it would not be worthwhile. Simply include the entry in the following year’s account (if trading) and move on.

If you wished you could, having left the filed accounts unchanged, file the following year’s accounts with the comparative prior year restated. Whilst technically you would need to explain the movement in the “old” and “new” opening reserves it is clear again that the amount of effort is not worthwhile and no benefit is gained. This is perfectly legal and acceptable as per the above legislation.

However, hopefully you’ll see it is a lot of effort for £13 and no benefit whatsoever; but they are your accounts and you did ask.

 

[Heyes]

If the company has never traded then you could have filed Form AA02 [LINK REMOVED BECAUSE THE POST WASN'T ACCEPTED WITH IT]

You could file amended accounts [LINK REMOVED BECAUSE THE POST WASN'T ACCEPTED WITH IT]

Notwithstanding, one of the concepts and conventions of accounting is that of materiality. Although materiality is subjective the omission is clearly not significant and the amount of effort involved in correcting it would not be worthwhile. Simply include the entry in the following year’s account (if trading) and move on.

If you wished you could, having left the filed accounts unchanged, file the following year’s accounts with the comparative prior year restated. Whilst technically you would need to explain the movement in the “old” and “new” opening reserves it is clear again that the amount of effort is not worthwhile and no benefit is gained. This is perfectly legal and acceptable as per the above legislation.

However, hopefully you’ll see it is a lot of effort for £13 and no benefit whatsoever; but they are your accounts and you did ask.

Thankyou.

Filing as a dormant company wasn't an option (although the company was dormant for HMRC, it didn't meet the Companies House requirements), and unless I've misunderstood something the filing fee for the confirmation statement would still have needed to have been accounted for in similar manner.

And again unless I've misunderstood, those links to the Companies Act make clear the need to revise and correct accounts known to have errors.

As you rightly note, materiality is subjective, although appropriate legislation (in this case the CA), appears to removes any element of doubt regarding interpretation.

That the amount is tiny doesn't appear to be of legal standing as a reason to not correct things so as to be legally compliant, and meet, as director of the company, my responsibility (to ensure the information within the submitted accounts is correct and a true and fair view of the state of affairs of the company as at the end of the financial year) - of which I'm in breach until corrected accounts have been filed.

Personally, I'm uncomfortable with there being, on public record at CH, uncorrected accounts which are known to be incorrect (albeit not in a manner I consider to be materially so).

That, and the CA, lead me to not 'just put a PYA in the next accounts'. Yes, it's commonly done and accepted but doesn't appear to cover the aforementioned legalities.

And although the CA doesn't state a timeframe during which revisions must be submitted, I can't see how either not doing so in a timely manner having become aware of the error or a PYA can be 'perfectly legal and acceptable as per the above legislation'.

And yes... I acknowledge that I'm focusing more on the legality rather than practicality of the issue... which almost certainly would remain undiscovered and/or likely, because of the small amount, uncared about.

Quite reasonably, with CH being reactive rather than proactive, I'm not worrying about action being taken against me for contravening CA S1112, or other civil/criminal offence.

Obviously, paper filing a correction is more of an inconvenience than onerous (almost certainly less time and effort than this thread) and so I *do* consider the effort to be worthwhile.

Had online filing a correction been an option (it's not, because I'd not used filing software for the original filing) I'd certainly have done it rather than start this thread.

However, a large part of my reason for posting was that I'm not very knowledgeable about accounting, and consider it'd be useful for me to know more, and so hoped (rather than expected) that there was something of which I was unaware and which would save me the effort of having to send paper to CH.

 

[Daybooks]

The Guidance on the AA02 form is clear that you can omit the filing fee if it is made by a third party without the right to re-imbursement. Now if you contend you made it not as a third party and / or have a right to it back then you couldn’t file the AA02.

Companies Act requires accounts to be prepared in accordance with general accounting principles – which is where the convention of materiality would apply. Thus you are not in breach of any legislation on this issue. Ask yourself what the reader of those accounts gains by understanding that £13 was omitted.

When you get more familiar with the concept of accruals and prepayments you will have fun or nightmares as the case may be deciding whether you should work on whole months, days or minutes even! Similarly when you realise a £5 purchase invoice was received very late and omitted from the accounts.

It is right that you should feel comfortable, after all they are your accounts. Remember accounts tell a story; do be careful that they portray your company in the right way going forward. Hopefully whichever way you decide to go it will be on an informed basis.

 

[Heyes]

The Guidance on the AA02 form is clear that you can omit the filing fee if it is made by a third party without the right to re-imbursement. Now if you contend you made it not as a third party and / or have a right to it back then you couldn’t file the AA02.

Companies Act requires accounts to be prepared in accordance with general accounting principles – which is where the convention of materiality would apply. Thus you are not in breach of any legislation on this issue. Ask yourself what the reader of those accounts gains by understanding that £13 was omitted.

When you get more familiar with the concept of accruals and prepayments you will have fun or nightmares as the case may be deciding whether you should work on whole months, days or minutes even! Similarly when you realise a £5 purchase invoice was received very late and omitted from the accounts.

It is right that you should feel comfortable, after all they are your accounts. Remember accounts tell a story; do be careful that they portray your company in the right way going forward. Hopefully whichever way you decide to go it will be on an informed basis.

Thankyou.

Hhhmmm...

'A fee may be omitted if payment by a third party without any right of reimbursement'... what an unusual exemption. (I wonder whether it also applies to online filings? It's certainly not mentioned onsite.)

That's an example of 'something of which I was unaware and which would enable me to avoid filing amended accounts' had the company been eligible to file as dormant, but which it wasn't due to having 'significant accounting transactions' (a transaction that is required to be entered in the company's accounting records).

I'd never considered 'payment made by a third party without any right of reimbursement'. Other than directors (claiming they had no right of reimbursement) (and I understand that an earlier version of that document included the word 'director' as a third party), I cannot imagine who else would pay.

And I don't know enough to speak on 'requires directors to ensure that the annual accounts give a true and fair view' versus 'accounts to be prepared in accordance with general accounting principles (and materiality)', so for safety I favour 'true and fair view'.

Digressing...

I've wondered whether 'dormant' status, in having relatively little advantage, is often 'over-rated and over-used'? I've known instances where directors pay costs (accounting, etcetera) personally so as to maintain the dormant status of a company.

And it seems likely that 'dormant' requirements are often misunderstood and/or ignored - applied to companies which are non-trading rather than dormant.

From memory, whether dormant or micro-entity there's little difference in the info required by CH (although apparently changes are likely with new legislation). And as the balance sheet needs to be prepared anyway (and the submitted accounts should be an exact copy of the accounts already approved by the directors), filing micro-entity rather than dormant at CH isn't onerous.

Additionally... although paying a filing fee is a permitted exemption and enables 'dormant' status to continue, the company having the money to pay it can be an issue...

I've always thought (prior to your alerting me to the AA02 wording) that unless enough money to pay filing fees for x years had been introduced through subscriber shares on formation, the money for filing fees would have to come from a director loan - a transaction required to be entered in the company's accounting records, and thus breaching conditions for dormancy. Oh well.

Anyway, I've thought-out-loud too much and moved beyond the original issue.

 

[MyAccountantOnline]

For a non-trading company I own, I'm unsure of how best to account for the Confirmation Statement filing fee (£13) which I paid from a personal account (because I'd closed the company bank account before filing annual accounts at Companies House).

My understanding (perhaps incorrect) is that it should be included in my director loan account, and appear as a creditor on the balance sheet...

..

Yes that's correct.

 

[Heyes]

Yes that's correct.

Thankyou.

 

[Heyes]

Just when we all though this thread was done, I'm back with another essay...

I'll happily admit to not knowing how to 'do a prior year adjustment' (suggested earlier and which, having thought a little more about it, would, I'm sure, be acceptable) being part of my reasoning to file amended accounts.

(Plus, rather than learning how to - having web-searched, I couldn't find anything - I need to get back to my core activities rather than delving deeper into the subject. And, in literally this month returning to business having been inactive for a few years, finding and engaging an appropriate accountant to advise/process is not the work of a moment and hence something I'll sort in coming months.)

One possible option to save me having to drive to the post office and buy a stamp is to simply include the director loan (for paying the filing fee) in the next year's accounts without a 'formal PYA' (if there is such a thing)

Howso?

The dates of the confirmation statement and accounts were merely weeks apart and in the same calendar month.

And, as it's accepted that many business transactions are bundled monthly (all the purchases made from a supplier during a calendar month being tallied at month end and then single-invoiced to the buyer), I'd consider this to also be reasonable for purchases (diesel, parking fees, tolls, photocopy paper, that box of fancy pens from the office superstore, and the extra ham & egg sandwich on the train back from Newcastle) made (particularly if the total is tiny) by a director on behalf of the company and entered into the DLA.

I'd consider this to meet the CA requirement for the accounts to 'disclose with reasonable accuracy, at any time, the financial position of the company at that time, with entries from day to day of all sums of money received and expended by the company'.

(And let's not forget... with a non-trading company it's unlikely anyone relevant will even become aware of the situation and almost certainly not be concerned over just £13.)

Digressing slightly... I'm more amazed than encouraged having seen elsewhere a similar-issue post from an accountant - asking whether a PYA would suffice rather than amended accounts.

The amount in question? £430k. (I'm even more surprised that, although most answers were 'file amended!' some were some suggesting 'PYA is ok'. (Whatever happened to 'true and fair view'?)

Anyway, I've learned a bit about accounting from this experience - and realise just how 'fuzzy and unsharp' I've become from being inactive.

 

[Daybooks]

Just when we all though this thread was done, I'm back with another essay...

I'll happily admit to not knowing how to 'do a prior year adjustment' (suggested earlier and which, having thought a little more about it, would, I'm sure, be acceptable) being part of my reasoning to file amended accounts.

(Plus, rather than learning how to - having web-searched, I couldn't find anything - I need to get back to my core activities rather than delving deeper into the subject. And, in literally this month returning to business having been inactive for a few years, finding and engaging an appropriate accountant to advise/process is not the work of a moment and hence something I'll sort in coming months.)

One possible option to save me having to drive to the post office and buy a stamp is to simply include the director loan (for paying the filing fee) in the next year's accounts without a 'formal PYA' (if there is such a thing)

Howso?

The dates of the confirmation statement and accounts were merely weeks apart and in the same calendar month.

And, as it's accepted that many business transactions are bundled monthly (all the purchases made from a supplier during a calendar month being tallied at month end and then single-invoiced to the buyer), I'd consider this to also be reasonable for purchases (diesel, parking fees, tolls, photocopy paper, that box of fancy pens from the office superstore, and the extra ham & egg sandwich on the train back from Newcastle) made (particularly if the total is tiny) by a director on behalf of the company and entered into the DLA.

I'd consider this to meet the CA requirement for the accounts to 'disclose with reasonable accuracy, at any time, the financial position of the company at that time, with entries from day to day of all sums of money received and expended by the company'.

(And let's not forget... with a non-trading company it's unlikely anyone relevant will even become aware of the situation and almost certainly not be concerned over just £13.)

Digressing slightly... I'm more amazed than encouraged having seen elsewhere a similar-issue post from an accountant - asking whether a PYA would suffice rather than amended accounts.

The amount in question? £430k. (I'm even more surprised that, although most answers were 'file amended!' some were some suggesting 'PYA is ok'. (Whatever happened to 'true and fair view'?)

Anyway, I've learned a bit about accounting from this experience - and realise just how 'fuzzy and unsharp' I've become from being inactive.

As with many professions you apply principles to the circumstances before you. You already have your answers because you have to apply those principles already given.

Thus legislation too does not seek to give you every scenario and a rule for it.

If you want to understand accounting principles more try here:
https://opentuition.com/
.. it will be a better use of your time.

 

[Heyes]

As with many professions you apply principles to the circumstances before you. You already have your answers because you have to apply those principles already given.

Thus legislation too does not seek to give you every scenario and a rule for it.

If you want to understand accounting principles more try here:
[I had to remove the link for my reply to be accepted]
.. it will be a better use of your time.

Yes, agreed.

And thankyou for the link.

If you've one for 'not letting OCD screw-you up to much', I'll happily go there too. (I'm trying to self-deprecatingly acknowledge a problem I know I have.)

 

[Daybooks]

Sadly not, but if it helps accounting is more of an art and not a science.

 

[Karimbo]

How comes you never get a receipt for the £13 fee

 

[Heyes]

You are correct that the Confirmation Statement filing fee should be included in your director's loan account if it was paid from your personal account. This will make you a creditor of the company, and the amount will appear as a liability on the company's balance sheet.

If you have already filed your annual accounts and did not include this fee in the balance sheet, you will need to file amended accounts to rectify the error. This will involve submitting a new set of accounts to Companies House, which include the correct information.

There is no alternative way to account for this fee that does not involve amending your accounts. However, the process of filing amended accounts is straightforward and should not be onerous.

In general, it is always advisable to seek professional advice when dealing with company accounts and finances, especially if you are unsure about how to account for specific transactions or events. This will help ensure that your accounts are accurate and comply with legal requirements.

Thankyou.

 

[Heyes]

...one of the concepts and conventions of accounting is that of materiality. Although materiality is subjective the omission is clearly not significant. Simply include the entry in the following year’s account (if trading) and move on.

I thank you again for this. Appreciated.

With much of 'accounting' not a core ability of mine, now I've had time to 'allow stuff to sink in' I'm gaining perspective I didn't have a couple weeks ago... and better understand what flexibility there may be within stated legal requirements.

Thankyou.