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Do I Need To File A Tax Return For My Dormant Company?

Currently, there are no requirements for filing a dormant company tax return, and it is not necessary for them to pay corporation tax either. This blog will outline what a dormant company is and how you can make your company dormant.

What is a dormant company and why don’t they need to do tax returns?

Shutter door with sorry we are closed on it

HMRC has a specific definition of what a dormant company is:

  • A company that has stopped trading and has no other income;
  • A new limited company that has not started trading yet;
  • An unincorporated club or association run for the benefit of its members and owes less than £100 corporation tax;
  • A flat management company.

If your company is classed as dormant by HMRC, then there is no need to file a tax return.

Can I make my company dormant to avoid filing a tax return?

Dormant companies are not trading and therefore are very limited in their usefulness as business vehicles. If your company does any of the following it will not be classed as dormant by HMRC:

  • Carries out business activities such as trade or professional activity;
  • Buys or sells goods with a view to making a profit;
  • Provide services;
  • Earn interest;
  • Manages investments;
  • Receives any other income.

How can I make a company dormant to avoid filing a tax return?

If a company fulfills the criteria of a dormant company, you can notify HMRC that it is dormant. This can be done over the phone or by post with the 10-digit Unique Tax Reference (UTR) number.

Once HMRC has verified that the company is dormant, you will be notified that you do not have to pay corporation tax. This notification will state that dormant companies do not need to submit a tax return.

Do I need to notify HMRC if my company is no longer dormant?

Company directors need to notify HMRC that the company is active again within 3 months from the date it starts trading again or receives an income.

Once the company has been made active again, it will need to submit its annual tax return. This will need to be submitted within 12 months from the end of the company’s accounting period. Any corporation tax due will then need to be paid within 9 months and 1 day from the end of the company’s accounting period.

For companies that have been classed as dormant, the accounting period begins when the company resumes trading.

However, the accounting reference date for Companies House remains the same. This is because the Companies House filings continue even when the company is dormant. This can lead to a difference between the two deadlines.

How can I align my deadlines again?

Red stamp that says deadline

It is possible to align your Companies House accounting reference date with the end of the corporation tax accounting period by doing the following:

  • If your dormant company’s accounting reference date is 30th September (for example). You start business activities again on 1st June.
  • Make a set of statutory accounts for the usual period from 1st October to 30th September.
  • Send your accounts to Companies House, and your Company Tax Return for the period 1st June to 30th September to HMRC.
  • After this, you will need to complete company accounts and a Company Tax Return from 1st October to 30th September each year.

Do dormant companies need to file anything?

Dormant companies do not need to file anything with HMRC.

Dormant companies are still obliged to file an annual confirmation statement and annual statutory accounts with Companies House. However, full annual accounts are not required - instead, you can submit simplified accounts, also known as dormant company accounts.

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