Key takeaways
- Restarting a dormant company means telling HMRC you are trading again and re-registering for Corporation Tax; the company itself stays on the Companies House register throughout.
- Statutory accounts must reach Companies House within nine months of your year-end, and Corporation Tax is due within nine months and one day.
- A Company Tax Return must be filed with HMRC within twelve months of the year-end, using full statutory accounts.
- You keep the same Companies House accounting reference date; your Corporation Tax accounting period starts from the day you resume trading.
- You can return to dormant status later by stopping trading and filing simplified dormant company accounts.
What is a Dormant Company?
A dormant company is one that has no significant financial transactions during a specific accounting period. This includes no sales, purchases, or any other business activities that would typically be reflected in financial statements. Essentially, it's a company that exists on paper but remains inactive in terms of business activities. Dormant companies still have legal obligations, such as filing annual returns and accounts.
Process to Restart a Dormant Limited Company:
Restarting a dormant company involves a structured process. Follow these steps to breathe life back into your business:
- Tell HMRC that your business has restarted trading by registering for Corporation Tax again. Sign in to your business tax account and follow the guidance to register.
- Send accounts to Companies House within 9 months of your company’s year end. Timely submission is crucial to meeting statutory obligations and avoiding penalties.
- Pay any Corporation Tax due within 9 months and 1 day of your company’s year end. Clearing this payment promptly ensures compliance with tax regulations and keeps your financial record clean.
- Send a Company Tax Return with HMRC - Within 12 months of your company's year end, submit a comprehensive Company Tax Return to HMRC. This should include full statutory accounts, providing a detailed overview of your company's financial activities during the year.
Deadlines for Company Accounts and Returns
When reactivating a dormant company, it's crucial to be aware of the deadlines for filing accounts and returns. Failure to meet these deadlines can result in financial penalties.
Even your company was dormant, you must have sent accounts to Companies House each year. This keeps your reporting dates same for annual returns and accounts.
Your Corporation Tax accounting period is different. It stats when your company restarts its business activities.
Here's what you can do:
- Maintain Your Company's Accounting Reference Date: Keep your company's accounting reference date unchanged with Companies House.
- Prepare Statutory Accounts as Usual: Create statutory accounts covering the regular 12 months leading up to your accounting reference date.
- Submit Accounts to Companies House and Use Them for Tax Return: Send these accounts to Companies House and utilize them to complete your Company Tax Return.
By following these steps, your Companies House accounting reference date and the end of your Corporation Tax accounting period will align.
Example:
Imagine your non-trading or dormant company's accounting reference date is 30 September. You decide to resume business activities on 1 May.
Create a set of statutory accounts for the standard period, spanning from 1 October to 30 September.
Submit your accounts to Companies House, along with your Company Tax Return covering the period from 1 May to 30 September, which you send to HMRC.
From now on, you'll need to complete accounts and a Company Tax Return annually, covering the period from 1 October to 30 September.
If I Make My Dormant Company Active, Can I Make It Dormant Again?
Yes, you can revert your company to dormant status if business circumstances change. When a company is dormant, HMRC doesn't demand any tax payments. Plus, there's no need to deal with company tax returns during dormancy.
Even if your company is dormant, filing annual statutory accounts with Companies House is a must. The good news? You don't have to submit full-blown accounts. Just a simplified version, known as dormant company accounts will be suffice.
Need Help Restarting a Dormant Limited Company?
While restarting a dormant company can be a rewarding endeavor, handling the legalities and paperwork requires diligence. To ensure a seamless transition and stay compliant with regulations, consider hiring experienced limited company accountants. Their expertise will not only simplify the process but also provide valuable insights for the future success of your revived business. Make the journey from dormancy to activity a well-informed and strategic one with professional guidance.
