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Dormant company breaking rules?

Dormant company breaking rules?

Postby caffiene » Tue Oct 31, 2017 10:20 am

Can a dormant company perform a credit check on an individual?
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Re: Dormant company breaking rules?

Postby atticus » Tue Oct 31, 2017 10:42 am

I am not aware of any restriction on who may carry out a credit check.

Is the real question whether in carrying out a credit check a company has woken from its slumber and can no longer claim to be dormant?
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Re: Dormant company breaking rules?

Postby caffiene » Tue Oct 31, 2017 11:04 am

atticus wrote:I am not aware of any restriction on who may carry out a credit check.

Is the real question whether in carrying out a credit check a company has woken from its slumber and can no longer claim to be dormant?


Yes. That is my question. If the dormant company is performing a contract with the credit check company then is that not carrying out a business activity?

There may be facts I do not know. It may be that a controlling company has the contract with the CRA and are making payment and the dormant company is just a mule?
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Re: Dormant company breaking rules?

Postby dls » Tue Oct 31, 2017 11:08 am

A credit check is likely to suggest that teh company is not dormant. You need to check the definition of dormancy for this purpose. There may be a requirement that it is trading.
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Re: Dormant company breaking rules?

Postby caffiene » Tue Oct 31, 2017 11:27 am

dls wrote:A credit check is likely to suggest that teh company is not dormant. You need to check the definition of dormancy for this purpose. There may be a requirement that it is trading.

I asked companies house. They told me that if there are any transactions from a dormant company bank account, then they are not dormant even if they are non-trading.
They said it might be dormant if the transactions are done by another party but would depend on the details.

However, I would imagine that if the company has a contract with the CRA and is legal liable for their fees, even if the fees are paid by another person, it would not be dormant. Otherwise, any secretive company could employ a proxy to manage their transactions and avoid filing accounts. Or, maybe that is an actual loophole?
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Re: Dormant company breaking rules?

Postby dls » Tue Oct 31, 2017 11:35 am

You were given an answer - no need to re-interpret it.

If it is a loopole, it does not look like avery big or advantageous one.
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Re: Dormant company breaking rules?

Postby theycantdothat » Wed Nov 01, 2017 10:59 am

"Dormant" has slightly different meanings according to what is under consideration. However, the basic position is that a dormant company may only (a) make payments in respect of fees payable to, or fines imposed by, Companies House, (b) change its its name or re-register and (c) otherwise do the things necessary to comply with the law and ensure that the company is not struck off the register.

It is a common misconception, entertained particularly by managing agents where tenants indirectly own the freehold through a company, that if no funds are paid into the company's bank account that the company is dormant. That is not the case. As soon as a dormant company is involved in any sort of financial transaction (including bank charges or interest however insignifcant and definitely including managing agents' fees) it loses its dormant status.
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