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Informing HMRC Your Company is Dormant

You must notify HMRC when you incorporate a company and you intend to keep it dormant or if your existing trading company stops trading and becomes dormant.

If you are incorporating a company from scratch you can select a SIC (Standard Industrial Classification) code for the company that shows Companies House that it will be a dormant company.

Once the new company is formed, Companies House informs HMRC and then HMRC sends a letter to the new company’s registered office address. The letter provides important information to the company, such as:-

  • It’s Unique Taxpayer Reference number or UTR number;
  • What to do when the company starts trading; and
  • How to set up the Corporation Tax online service.

When you receive this letter you will need to send your own letter to HMRC explaining that your company is dormant and does not intend to trade. Your letter will need to include your UTR number so that HMRC can identify your company. If you do not respond to this letter, HMRC will expect a corporation tax return and there will be repercussions if this is not supplied within the requisite timeframe.

After you have sent your letter to HMRC they will acknowledge it in writing and confirm that you will not need to submit corporation tax returns for the company going forward. If they do not do this you will need to contact them again as they may not have received your letter. Once HMRC have acknowledged your company is dormant, you will still need to ensure all the basic compliance requirements are met.

You will need to maintain the statutory registers, file the confirmation statement, the dormant accounts and any changes to the company’s officers or registered office address or Single Alternative Inspection Location (SAIL) address will need to be reported. Contact M & N to see how we can help you write your letter to HMRC, file your dormant accounts, maintain your statutory registers and file your confirmation statement.

If you are taking a break and your company ceases trading for a time, but you intend to start trading again in the future and you do not want to dissolve the company, then making your company dormant for a while might be a good idea. Generally, dormant companies cannot have any transactions passing through them therefore all trading will need to be ceased and any loose ends tied up.

Before notifying HMRC of the company’s dormant status, you must pay all outstanding bills and VAT payments, ensure that you’ve received all expected payments from clients, pay wages and close the payroll, close the company’s bank accounts and cancel all contracts.

You can then contact HMRC to tell them that the company is now dormant and the date this happened. You will then receive a “notice to deliver company tax return” covering the time period before the company became dormant. Complete and return this with a payment for any outstanding tax. Provided that everything is in order, HMRC will write to you acknowledging your company’s dormant status.

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