Are you wondering if you are still liable to pay taxes to the government despite your company being dormant? That’s a fair predicament! As you well know, in the UK, HMRC (HM Revenue and Customs or HMRC), a non-ministerial department of the UK Government is responsible for the collection of taxes, the payment of some forms of state support and the administration of other regulatory regimes. According to this regulatory body, a company or association must file a Company Tax Return if a ‘notice to deliver a Company Tax Return’ is received from them. The return must be filed, despite making a loss and having no Corporation Tax to pay.
Now that you have the answer to your question, let’s get down to the brass tacks of it. How do you go about the filing process? What are some of the important aspects that need to be considered? Here are some of the finer details that need your attention:
TAX RETURN FORMALITIES
No Company Tax Return needs be filed for a sole trader or one who is in partnership. However, a Self Assessment Form is required to be filed.
Company Tax Return is as per Form CT600 for Corporation Tax with HM Revenue and Customs (HMRC).
Company Tax Return and accounts may be filed at the same time if they are for the same accounting period.
When a company files it’s tax return, it must work out its profit or loss for Corporation Tax, which will be different from the profit or loss shown in its annual accounts.
The deadline for tax return is 12 months from the date of the end of the relevant accounting period. Penalties are levied if the tax return is filed after the statutory 12 month period.
DORMANT COMPANIES ADMINISTRATIVE, TAX AND ACCOUNTS FILING FORMALITIES
When a company has stopped trading and has no other income, the said company may duly inform HMRC that it has become dormant for purposes of Corporation Tax.
When the company never had received a notice to file a Company Tax Return, the said may inform telephonically or by post, accordingly.
However the company would still need to file a Company Tax Return online, duly conveying to HMRC that the company is dormant.
HMRC shall not however, send the company another notice to file a company tax return, once they treat the said company as dormant.
The company need not pay Corporation Tax or file another Company Tax Return once the said company has informed HMRC that it is dormant.
The company must, however, still file annual accounts and a confirmation statement (previously annual return).
Limited companies must fulfil a number of statutory filing and reporting requirements for Companies House and HM Revenue and Customs (HMRC).
Company directors are legally responsible for maintaining these statutory duties, which include (inter alia):
Sending annual confirmation statement to Companies House at least once a year.
Preparing financial accounts for Companies House.
Notifying Companies House about changes to company details.
Filing Company Tax Returns and annual accounts with HMRC.
Paying Corporation Tax.
If a company is dormant (not trading), it must notify the Corporation Tax department within HMRC. Companies, in such cases, will not have any corporation tax requirements until it becomes active. However, such companies will have to prepare dormant accounts and confirmation statement, every year.
Now that you have a fair idea about the filing of taxes if your company has been dormant for a while, you can get in touch with us to help you look after the ardent process of filing it so you can focus on growth and progress.