A company with no significant accounting transaction during the year is regarded as dormant company. As a dormant company, it will automatically be classified as small company under the Companies Act 2006 which its accounts will be exempted from audit.
A company that has not been traded since its incorporation is entitled to submit dormant account to Companies House.
Where the company is dormant since the end of the previous financial year, although there will be no trading results for the current period, a profit and loss accounts should still be prepared to show the previous year comparative figures.
It is important to note that certain companies are not eligible to prepare audit exempt accounts if they are either:
- A public limited company (Plc)
- A company that is carrying on an insurance market activity
- A banking company
- An authorized person under the Financial Services Act 1986.
- A member of an ineligible group
- The company is parent or a subsidiary a group, with the group turnover exceed the audit threshold.
A dormant company must prepare audited financial statements if an audit has been requested by 10 percent or more of the members in writing at the company registered office.
The company must submit audited financial statements if its Articles and Association does not permit the company to dispense with an audit.
There is a late filing penalty for deliver accounts late even just by one day.
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