Changing the status of a company from dormant or dissolved to active should follow guidelines.
Let us start by discussing a dormant company – referring to a company that is still registered with Companies House but does not trade or receive income.
HMRC uses the term ‘dormant’ when a company does not pay corporate tax and when:
- It has stopped trading and has not received any income.
- It is a new limited company that has yet to start trading.
- It is an unincorporated association or club owning less than £100 Corporation Tax.
- It is a flat management company.
There are numerous reasons as to why directors and shareholders would want to keep their companies dormant. Some of these reasons include waiting for the market to change, holding fixed assets, taking a break from trading, or even wanting to protect the business name so that nobody else can use it.
If you are reading this article, there is a good chance that you own a dormant company and you are looking to restart it. So how do you do that? In this article, we aim to explain the process involved.
Restarting a dormant company
As HMRC oversees all company-related matters, you must inform HMRC within three months when your dormant company starts to trade or receive an income. Trading, in this case, includes the activities of buying, selling, renting property, advertising, employing someone or receiving interest.
The process also involves:
- Registering for Corporate Tax again with HMRC.
- Sending accounts to Companies House within nine months of your company’s year-end. It must be said that during the period in which your company remained dormant, you should have continued sending accounts to Companies House. Therefore, your company’s year-end will remain the same as it has always been.
- Paying any Corporate Tax due within nine months and one day of your company’s year-end. Conversely, your Corporate Tax period starts when you restart trading, so this is unrelated to previous accounting periods.
- Sending a complete Company Tax Return to HMRC within 12 months of your company’s year-end. Your Company Tax Return must include a copy of your statutory accounts. As with the first point, your company’s year-end will remain the same as it has always been.
In addition to the above tasks, you may also need to re-register for VAT if it is deemed necessary. As it is situation-based, it is best to give us a call and discuss your unique case. In addition, you will also need to restart your PAYE scheme if you choose to employ staff.
A common approach taken by company directors when they decide to restart a dormant company is to engage a trusted chartered accountant to help them with accounting and tax matters. At Tax Agility, we are small business accountants dedicated to helping small business owners and contractors across London. If your plan is to start trading again, give us a call on 020 8108 0090 and we will be glad to assist you.
A dissolved company is a company that has been permanently removed from Companies House. This happens when the company directors choose to dissolve the company voluntarily, or when the company is forcibly struck off for not sending your accounts to Companies House.
To restore a company that has been struck off the register voluntarily requires a court order, applied by one of the following people:
- Any former director, member, creditor or liquidator,
- Any person who had a contractual relationship with the company or who had a potential legal claim against the company,
- Any person who had an interest in an asset (land or property) in which the company also had an interest, right or obligation,
- Any manager or trustee, acting on behalf of the employees’ pension fund of the company.
- Any other person who appears to the court to have an interest in the matter,
- Any person listed in Companies Act 2006 Section 1006(1) or 1007(2) and where the company was struck off the register under Section 1003.
As the court is likely to require the applicant to show evidence in supporting the court order, it is wise to consult a legal representative.
To restore a company that has been dissolved, because Companies House believes that it does not appear to be in operation, a former director or shareholder may apply to the registrar to have the company restored. This process is known as ‘administrative restoration’.
To apply for administrative restoration of your dissolved company, you will need to complete Form RT01 and send it to Companies House, along with the followings:
- A £100 cheque made payable to Companies House.
- Evidence to show that the company has delivered all documents necessary to bring the company up to date and paid any outstanding late filing penalties. If you need help with bringing your accounts up to date, contact one of our chartered accountants at 020 8108 0090 today.
- A waiver letter if the company had property or rights. This must be obtained from the relevant Crown representative.
When Companies House receives your application, the Registrar of Companies will take their time in deciding whether or not to restore your company.
If the registrar decides to restore, the restoration will take effect from the date they send the notice. But if the registrar decides not to restore the company, you may apply for a court order within 28 days.
Tax Agility can help get your company back up and running
At Tax Agility, we have years of experience in helping small business owners and contractors across London with their finance and tax matters. We understand that sometimes you may want to suspend the operation temporarily to focus on something else, and when the timing is right, you want to restart a dormant company or to restore a dissolved company. Either way, we are here to support you so your company will meet all of its statutory requirements.
Give us a call on 020 8108 0090 or get in touch with our online form today to begin.
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This post is intended to provide information of general interest about current business/ accounting issues. It should not replace professional advice tailored to your specific circumstances.