When a new company is listed with Companies House, HMRC will be notified of its existence and a letter detailing the accounting and tax obligations of your company will be sent to your registered office address as well as how to register for corporation tax. Your company will only become ‘active’ once you start trading, and a company will be considered to be trading when:
- It starts any business activity or provides any services,
- any goods are bought or sold with the aim of making profit or surplus,
- It manages investments, earns interest or receives earnings of any kind.
Dormant to active
Perhaps your company is currently not trading or performing any business activity, HMRC will regard it as dormant. In this instance, your company is inactive and not liable for corporation tax so you need not register with HMRC at this time. When your inactive company becomes active, you will have to notify HMRC within three months of starting any business activity.
The status of your company will be changed from dormant to active and then will be fit for filing a Company Tax Return or paying corporation tax. You can inform HMRC about your company’s active status with the use of their online registration service or providing the relevant information in writing. Additional information on your company’s accounting and tax obligations can be obtained on the Your Company Formations blog and the HMRC website.