If your company is no longer trading and does not have any other income, you can tell HMRC that it is dormant. This will relieve you of the need to file a company tax return or pay corporation tax. However, while your company still exists, even if it is no longer trading, you will still need to file annual accounts and a confirmation statement with Companies House.
Dormant for corporation tax
A company will normally be classed as dormant for corporation tax if:
- it has stopped trading and it does not have any other income;
- it is a new limited company which has not yet started to trade;
- it is an unincorporated association or club that owes less than £100; or
- it is a flat management company.
A company will not be dormant if it is buying, selling, renting property, advertising, employing anyone or receiving interest.
If you think that your company is dormant for corporation tax, you can use HMRC’s online service on the Gov.uk to inform HMRC of this. To use the service you will need:
- the company name;
- its 10-digit Unique Taxpayer Reference (UTR); and
- the date it stopped trading.
HMRC decide your company is dormant
You may get a letter from HMRC telling you that they have decided to treat your company as dormant.
Implications for corporation tax
Once you have told HMRC that your company is dormant (or they have decided to treat it as dormant) you will not need to pay corporation tax or file a company tax returns unless you receive a notice to file. Once you have filed a return showing the company to be dormant, you should not receive a further notice to file.
Registering your company as dormant with HMRC does not relieve you of your Companies House obligations. Your obligations depend on whether the company is ‘dormant’ for Companies House. This is the case if you did not have any significant transactions in the year. Any filing fees paid to Companies House, penalties for late filed accounts or money paid for shares when the company was incorporated do not count as significant financial transactions. If your company is dormant for Companies House and also ‘small’, you can file dormant company accounts. You will need to file a confirmation statement too.