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Your Dormant Company: Informing HMRC You Owe No Corporation Tax

Updated: Oct 16, 2023

Owning a company comes with its share of responsibilities, paperwork being a significant one. If you're in a situation where your company is dormant, and you've recently submitted your tax return confirming you owe no tax, you might breathe a sigh of relief, thinking the hard work is done. But let's take a closer look.

What does it mean when a company is dormant? Your company is considered dormant if it's not actively trading or generating any income, such as from investments. This might be the case if you've just set up a new company but haven't started doing business yet. If you're confident your company is dormant, make sure to inform HMRC. You can do this easily online, but if that's not your cup of tea, a phone call or a letter works just as well.

I've filed my tax return. What's next? Even after filing a tax return showing zero tax due, you might get a letter from HMRC. This letter is a reminder about the due date for the corporation tax of that period. If you're certain you don't owe any tax, it's crucial to let HMRC know. While you might feel you've already informed them by submitting your tax return, it's essential to reiterate.

How do I stop those reminder letters from HMRC? No one likes unnecessary paperwork or reminders. To stop receiving these reminders, visit the website. Once there, choose the option 'tell HMRC no amount is due'. Following this, click the 'nil to pay form' and key in the 17-digit corporation tax reference from your letter. This number combines your company's 10-digit unique taxpayer reference with added characters signifying the relevant period, such as 1234005678A00101A. Be careful when entering these numbers; accuracy is key.

And after that? If HMRC is convinced of your company's dormant status, they might send you a letter saying just that. This means you won't have to worry about corporation tax or company tax returns for the time being. However, keep in mind that even dormant companies need to send confirmation statements and accounts to Companies House. If your company is small, you can submit dormant company accounts.

Lastly, remember that certain transactions, like filing fees or penalties, don't disrupt your company's dormant status. Always keep an eye out for any changes or updates, and when in doubt, refer to the Companies Act 2006 or the website for detailed guidelines.

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