A community interest company (CIC) is, of course, a completely different creature from a standard company.
One way that sets them apart is when they enter ‘dormant’ status.
What is ‘dormant’ status?
Any company is defined as dormant by the Companies House if it can report ‘no significant accounting translation’ during the accounting period.
With for-profit companies, this is not an issue. The Companies House doesn’t care if your business isn’t making money. CICs have to pass the “community interest test.” If it has locked assets that cannot be used to help the community, it fails the test. The Companies House won’t allow a CIC to be dormant for too many years.
Filing dormant accounts with Companies House
Even if your limited business is any of the following, you must still file your confirmation statement (formerly ‘annual return’) and annual accounts with Companies House:
However, if your business is listed by Companies House as ‘small’ and dormant, you can file
‘Dormant Accounts,’ instead of filing an auditor’s report with your accounts.
‘Dormant’ for Companies House
A company is considered dormant if it had no significant translations during the accounting period. The Companies House states that filing fees paid to Companies House, penalties for late filing of account, and money paid for shares when the company was incorporated don’t count as ‘significant’.
If you restart trade, you don’t need to advise Companies House. You will simply file your accounts at the appropriate time in the future showing that you started trade again.
For more guidance, see For purposes of Corporation Tax, your business is typically idle if:
is a new limited company that hasn’t begun operations or an unincorporated association or club that owes less than £100 that has stopped trading and has no other sources of revenue, such as investments. A corporation that manages apartments is Corporation Tax.
For more information, see ‘Life of a company – part 1 – annual requirements’ from Companies House.
‘Dormant’ for Corporation Tax
For purposes of Corporation Tax, your business is typically idle if:
- is a new limited company that hasn’t begun operations
- an unincorporated association or club that owes less than £100
- has stopped trading and has no other sources of revenue, such as investments.
- a corporation that manages flats
Do not do it alone. Arrange a free initial consultation
Regardless of whether you had any transactions in your CIC in the accounting period or not, you need to file with both Companies House and HMRC.
Not filing will incur a fine. This adds insult to injury since there’s no revenue to pay the fines.
If your CIC has been dormant for more than a year, you should get some advice about how to dissolve it. Since it’s not meeting the ‘community interest’ test, it will need to be closed soon. It will be easier if you initiate it than to have Companies House start it for you.
Do not do it alone. Arrange a free initial consultation.
Call us today at 0207 953 8913 or complete our enquiry form in order to book a free initial CIC consultation.
Categories: CIC Accounting, cic accounts, CIC Accounts, Community Interest Companies, Community Interest Company Accounts, Company Accounts, filing CIC Account, filing CIC Account
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