Dormant Accounts when change in share capital

[milo.jaden]

I seem to having trouble submitting Dormant Accounts for my current period with Companies House web filing portal.

I submitted dormant accounts for my previous period amassing to a total of 1 ordinary shares (done via companies house web filing portal all successfully without any issues). During my current period, I allotted new shares to bring the total up to 500 shares. However, I did no trading so am attempting to submit Dormant Accounts once again. However, I am getting a validation error in the issued share capital section of the form. Obviously, I am entering a total of 1 share for my previous period and 500 for my current period, but it complains that these numbers are not the same. The validation error is:

"The 'Issued share capital total' current and previous period figures must be the same."

Can someone please advise on this? Is it incorrect of me to be submitting dormant accounts since new shares have been allotted? Or is this an issue with companies house?

 

[Bob]

I suspect that the issue of shares is a significant accounting transaction and that accordingly you are unable to submit dormant accounts

 

[milo.jaden]

Hi, thanks for your response. However I notice that one of the first points in your link states that payment for shares can be ignored:

When determining whether a company is dormant you can disregard the following transactions:

• payment for shares taken by subscribers to the memorandum of association

 

[Bob]

Your additional shares were not subscriber' shares. Subscriber shares are the ones that are issued when the company is formed and the shareholders subscribe to them in the initial documentation filed with Companies House

 

[milo.jaden]

Hmmm ok thank you. I also tried enter in the form that the new shares have not been paid so that currently paid up share capital is still 1. However, I still get a validation error.

So in essence, this allotment of new shares (even if not paid) is considered a significant accounting transaction? Thus the company is considered to have been trading since that transaction and subsequently full accounts will need to be submitted? Also does this mean that HMRC should have been notified of this at the time (within three months)?

Again, thanks so much for your answers

 

[Bob]

No you won't be treated as trading. It just means that you can't use the dormant accounts option at Companies House and you will have to submit very basic abbreviated accounts. You should be able to webfile those as well as they will only show issued share capital of £500 or £501 and a debtor for that amount as unpaid share capital

 

[milo.jaden]

Yes I see there are five options for the type of accounts that can be submitted to Companies House and one of them being Abbreviated Accounts. However it states the following in the description:

'These audit exempt accounts are suitable for companies to input abbreviated figures from their full accounts that have already been prepared and approved.'

As far as I understand this statement, I must have full accounts already prepared and approved? If so approved by whom?

Also If I am to submit abbreviated accounts, am I required to communicate/submit anything to HMRC for my situation?

 

[Bob]

Frankly in your case the abbreviated and full accounts will be one and the same thing for all practical purposes. That assumes that the only transaction since incorporation has been the issue of shares. You will approve them as director and shareholder. You only need to tell HMRC when you commence trading

 

[milo.jaden]

I see, thanks. Yes the only event that has occurred is an allotment of new shares bringing the total from 1 share to 500 (ordinary shares). All shares have been paid up to date via cash. So I am attempting to submit abbreviated accounts and have the initial entry of the following (where the number left of the bar is the current period and the number right of the bar is the previous period):

Fixed Assets:
0 | 0 - Called up share capital not paid
0 | 0 - Tangible assets
0 | 0 - Investments
0 | 0 - Total fixed assets

Current Assets:
500 | 1 - Stocks
0 | 0 - Debtors
0 | 0 - Investments
0 | 0 - Cash at bank and in hand
500 | 1 - Total current assets

0 | 0 - Prepayments and accrued income
0 | 0 - Creditors: amounts falling due within one year
500 | 1 - Net current assets (liabilities)
500 | 1 - Total assets less current liabilities
0 | 0 - Creditors: amounts falling due after more than one year
0 | 0 - Provisions for liabilities
0 | 0 - Accruals and deferred income
500 | 1 - Total net assets (liabilities)

Capital and reserves:
500 | 1 - Called up share capital
0 | 0 - Share premium account
0 | 0 - Revaluation reserve
0 | 0 - Other reserves
0 | 0 - Profit and loss account

500 | 1 - Shareholder's funds


Does this look correct? Any help would be greatly appreciated. Thanks again!

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My previous dormant accounts that were submitted looked like this:

Current assets
1 - Cash at bank and in hand
1 - Net assets
Issued share capital
1 - One Ordinary Share of £1 each
1 - Total Shareholder funds

 

[Bob]

If the shares were paid in cash, shouldn't the £500 be against Cash at Bank and in Hand rather than Stock?

 

[milo.jaden]

That is actually something that perplexed me and hoped you would pick up on that. Also in the previous period I had 1 for current assets - cash at bank and in hand so surely it makes sense to do as you say. So I should move the 500 | 1 from Stocks to Cash at bank and in hand (and set 0 | 0 for Stocks) is what you think? Is there anything else incorrect?

 

[Bob]

Yes move it to cash and then they should be OK

 

[milo.jaden]

Bob you are a star, thank you so much!

I'm guessing 'Stocks' here means stocks/shares held in other companies?

 

[Scalloway]

Stock here means goods purchased for resale not sold at the balance sheet date.