Contractors' Questions: How to file accounts for a dormant company?

Contractor’s Question: I know the normal advice is ‘just get an accountant’ but the limited company I want to file accounts for has been dormant since being established, so to pay someone to simply enter ‘zero’ in the right way seems like a waste of money. Am I right in thinking this and, if so, can you broadly outline what I need to do to meet my tax obligations, as the company’s director and secretary?

Expert’s Answer: If you have never traded through your company, then I suggest that you contact HMRC (preferably by letter), to advise that the company is dormant and will be for the foreseeable future. They will then not issue your company with a notice to complete a company tax return each year. On incorporation, though, you should have completed a CT 41G to indicate your dormant status so they may have this information already. I suggest that you contact the Revenue to confirm this.

Be careful though -- 'dormancy' is not the same as non-trading. For example, you may consider that being in receipt of bank interest (taxable) and not being in receipt of any trading income constitutes 'dormancy.' In the eyes of HMRC, this is an active company and a company tax return is required in this respect, as a tax liability will arise on the interest received. Once you start to trade, you must tell HMRC as you then become within the charge to tax, and a company tax return will be due for this period.

Your other minimum compliance requirements in these circumstances are two-fold and relate to:

Companies House

With them, file your dormant account (AA02) DCA form and Annual Confirmation Statement.  Also file your Register of People with significant control if  you have not already done so. 

Your personal tax position

As a director of the company, there is still an obligation to complete a self-assessment return.

In conclusion, if there is any doubt with regards to your status with HMRC, do contact them to clarify this as doing so will prevent any unwarranted penalties being issued. 

The expert was Matt Fryer, director of compliance at Brookson, specialist accountants for self-employed professionals.

Monday 9th October 2017