Is your company dormant and wondering if you’re bound to filing tax returns?

This guide explains the dormant company reporting and company tax return filing requirements and avoid penalties.

What is a dormant company?

A dormant company is one that doesn’t trade or has no significant accounting transactions during the financial year. Any company registered with Companies House that was previously trading but is deemed dormant by HMRC when no transactions occur in its accounting period.

So whether you have a company that has no trading activity other than the initial payment received by the company for shares issued to subscribers that are fully paid when the company is first incorporated. To retain the dormant company status you have to ensure that statutory fees are incurred for registering the company with Companies House. Typically as a dormant company, you should have settled civil penalty for late filing of accounts or for missing your payment deadline.

Do dormant companies need to file tax returns?

If your company remains dormant for any time, you must inform HMRC that you’ll no longer be trading. You don’t need to pay Corporation Tax or file another Company Tax Return. You should meet the accounting and filing obligations to complete the annual tax returns even if you have no tax liabilities.

What are the statutory requirements of a dormant company?

You must file annual accounts and an Annual Confirmation Statement to Companies House and provide a balance sheet and notes about the accounts. It will have a deadline for filing no later than 9 months after your accounting reference date (ARD) ends. You must file the annual accounts no later than 12 months after your accounting period ends. You can report changes to registered company details, and keeping company records up to date on the Companies Register.

How to make a dormant company active?

If your dormant company becomes active, you’ll need to notify HMRC within the first three months that you have started trading. The accounts should be submitted to Companies House no later than nine months after your company’s financial year ends. You have to settle the corporation tax within 9 months and one day after the end of the accounting period.

Finally, a company tax return, including full statutory accounts, must be filed no later than 12 months after the end of the accounting year. You’ll have to pay a civil penalty if you miss the deadline.

Need to file dormant company accounts?

We hope we’ve shed some light on the statutory obligations of a dormant company. If you’d like to convert your files to iXBRL format to file your dormant company accounts with HMRC, we’re here to help. DataTracks is a recognised iXBRL tagging service provider of HMRC in the UK with a proven track record of success in fulfilling tax compliance requirements spanning 17+ years.

Our dedicated team of experts will make your iXBRL tagging for annual returns simple and secure at quick turnaround time. We also provide a one-stop solution for CT600, and MTD for VAT for HMRC filing.

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