How can a Dormant company receive a premium?

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    How can a Dormant company receive a premium?

    Hello,
    A limited company is going to grant a lease for a small premium just to cover its expenses, and there will be no rent. Can this company declare itself Dormant to Companies House and HMRC?


    Thanks!

    #2
    No. A company which engages in a transaction is not dormant.

    Comment


      #3
      Right, but is there no way around it, like someone receiving the payment on behalf of the company?

      Comment


        #4
        Originally posted by luketj View Post
        Right, but is there no way around it, like someone receiving the payment on behalf of the company?
        No, because the company still has the benefit of the money. Apart from the company is not dormant if it is granting a lease.

        Comment


          #5
          Don't many dormant companies have lessees?
          And, having the benefit of money is not a transaction, is it?

          Comment


            #6
            Filing of annual accounts are required by Companies House and the accounts filed this year will be reporting for last year.

            So your company could be dormant last year ( no reportable transactions ) but trading this this year due to receipt of some payment.


            http://www.cheapaccounting.co.uk/blo...rmant-company/

            Comment


              #7
              Neither is a promise to pay, for example the lessee owes the company the premium, but the company allows the debt to continue unpaid.

              Comment


                #8
                Originally posted by luketj View Post
                Hello,
                A limited company is going to grant a lease for a small premium just to cover its expenses, and there will be no rent. Can this company declare itself Dormant to Companies House and HMRC?


                Thanks!
                No. And No.

                Originally posted by luketj
                is there no way around it
                No.


                Originally posted by luketj
                And, having the benefit of money is not a transaction
                But what gets it the benefit of the money is a transaction.

                Comment


                  #9
                  I'm finding this difficult to believe.
                  Why cant the lease say "a premium of £1000 payable to... someone else other than the company"?

                  Comment


                    #10
                    Originally posted by luketj View Post
                    I'm finding this difficult to believe.
                    OK. But the law does not depend on whether you believe it or not.

                    Originally posted by luketj View Post
                    Why cant the lease say "a premium of £1000 payable to... someone else other than the company"?
                    A lease can say that. But then the company granting it will have carried out a significant accounting transaction and so not be dormant. There may also be a whole heap of tax issues with the money going to someone else (CGT on disposal of lease at deemed market value that you know all about, settlements legislation, distributions legislation, employment income, disguised remuneration, chargeable lifetime transfer and so on).

                    Comment


                      #11
                      Muggsy, I'm too scared to notify them that a lease has been granted because of the tax bill that could hit me! I cant find sure information about the tax implications for land taken by adverse possession. No information anywhere!

                      Comment


                        #12
                        And it's not the law I'm finding difficult to believe. You have not quoted me any law. Is there a law that says "A dormant company cannot authorise a third party to receive a payment in its behalf"? Or can you show me a law that says "A dormant company cannot defer a payment from a debtor until a future time"?

                        Comment


                          #13
                          luketj

                          Are you a director or shareholder of this dormant company ?

                          Comment


                            #14
                            Please forgive my apparent ignorance of this topic but where on earth is the advice which has been sought and received from the accountants and possibly supported by the company's legal representatives. It is their guidance which needs taking on board to ensure that you have complied with legal and tax implications.

                            Comment


                              #15
                              Originally posted by luketj View Post
                              And it's not the law I'm finding difficult to believe. You have not quoted me any law. Is there a law that says "A dormant company cannot authorise a third party to receive a payment in its behalf"? Or can you show me a law that says "A dormant company cannot defer a payment from a debtor until a future time"?
                              That's not how any law works. You don't have a law saying "luketj can't phone John while driving a red car on the Western Way after lunch".

                              If tax is what interests you then have a look at sections 8, 21, 17, 18 and 240 and Schedule 8 TCGA 1992 (in that order).

                              Originally posted by luketj View Post
                              I'm too scared to notify them that a lease has been granted because of the tax bill that could hit me!
                              Do it bit of googling of "tax fraud", "tax evasion", "tax-geared penalties" and let us know whether you feel more comfortable. If you do, then google section 32(1)(a) Theft Act 1968.

                              Then you should get some proper advice.

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