Companies House and HMRC both have differing definitions of what they class as a dormant company.
Companies House define a dormant company as a company which has no significant accounting transactions during it accounting period. A significant accounting transaction is one which it should enter in its accounting records. If a company has been dormant since the end of its last accounting period there is no need to submit full accounts. A dormant set of accounts can be submitted which do not have to contain a profit and loss account or a directors report. An annual return does still have to be filed yearly while the company is dormant.
HMRC consider a company to be dormant when they are not active, i.e. they are not trading. If no sales are made by a company HMRC will consider them dormant for tax purposes. A dormant company is not required to make a tax return. This exemption is gained by writing to HMRC informing of the date which the company stopped trading. In return HMRC will issue a final notice to file (if appropriate) and will not issue another notice until they are informed in writing that the company is once again trading.
By Jo Nockels
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