Dormant companies can not opt for the audit
exemption provisions in the following circumstances:
- The company is regulated by the FSA act and is permitted under the act to
carry on investment business
- The company is engaged in insurance as a business
- It has not been dormant for the whole of the accounting period
- It is part of a group of companies one of which operates in the insurance
business or is regulated by the FSA
- it is a public limited company
Small companies are defined as:
- Sales of less than £5.6 million
- Gross assets of less than £2.8 million
- An average number of employees less than fifty
It is worth noting the above thresholds as if a dormant company begins to
trade it is likely that in the initial years, it will be entitled to small
company exemptions
Dormant companies may elect to forego its annual audit by taking advantage of
the small company exemptions. In addition to this, they may be able to prepare
and submit accounts which are condensed compared to the standard financial
statements which non exempt companies have to present.
These condensed accounts include only a balance sheet and explanatory notes
to the accounts and can be sent to Companies House. The shareholders of the
company can receive these documents but must also be provided with some form of
trading statement and a report by the directors.
The exemption which apply to public limited companies are not as extensive as
they are for the private counterparts. They (even though they may be dormant)
must include a report of the directors, balance sheet an accounting notes and if
an income statement if comparatives exist.
Continued
Do call us if you would like further help or advice on this subject.
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