Dormant companies mean different things to Companies House and HMRC. For Companies House, ‘Dormancy’ is the status of a Limited Company that has not had any significant accounting transactions during its financial year. For HMRC, a dormant company is one that is not active, not liable for Corporation Tax or not within the charge to Corporation Tax.
Companies House
For Companies House purposes ‘Dormancy’ is the status of a Limited Company that has not had any significant accounting transactions during its financial year.
Certain expenses are not considered significant. These significant transactions don’t include:
- filing fees paid to Companies House
- penalties for late filing of accounts
- money paid for shares when the company was incorporated.
If a company has more expenses than these, then the company isn’t dormant and must prepare and submit financial statements and its confirmation statement as usual.
HMRC
From a HMRC perspective, a dormant company is one that is not active, not liable for Corporation Tax or not within the charge to Corporation Tax. This means that you should have no taxable income at all – so if you have rental income, receive bank interest etc., in HMRC’s eyes you are receiving taxable income therefore you are not dormant.
HMRC are unlikely to determine your company as dormant if they are waiting for a company tax return where you have trading activity included. Once this is submitted, and you are clear that in your new accounting period you will not have any taxable income going forward, you can advise HMRC of this.