Dormancy for HMRC?
Discussion
Good afternoon,
I have started a LTD business and believe that we meet the requirement of a dormant business for HMRC. I attempted to clarify the specific rules over the phone but they weren't very forthcoming, and directed me to this page for all enquiries;
https://www.gov.uk/guidance/corporation-tax-tradin...
I do believe that we meet the criteria for dormancy with HMRC but would appreciate the advise of an expert. I don't want to start off on the wrong foot.....
We are developing a product that we hope to bring to market. So far the only money 'in' the business is in the form of interest-free directors loans to fund our initial costs. Those costs include the purchase of a domain name, the purchase of some intellectual property and shortly payment for prototypes to be made. I believe that these qualify as preliminary expenditures.
We have no income, we have no public storefront or sales whatsoever, no dividends or salaries etc. I understand that one of the criteria of an 'active business' is receiving any other income, but by my understanding the director's loan is a debt, not an income.
Am I right in my belief that I can sensibly file as a dormant company until we begin trading?
Many thanks.
I have started a LTD business and believe that we meet the requirement of a dormant business for HMRC. I attempted to clarify the specific rules over the phone but they weren't very forthcoming, and directed me to this page for all enquiries;
https://www.gov.uk/guidance/corporation-tax-tradin...
I do believe that we meet the criteria for dormancy with HMRC but would appreciate the advise of an expert. I don't want to start off on the wrong foot.....
We are developing a product that we hope to bring to market. So far the only money 'in' the business is in the form of interest-free directors loans to fund our initial costs. Those costs include the purchase of a domain name, the purchase of some intellectual property and shortly payment for prototypes to be made. I believe that these qualify as preliminary expenditures.
We have no income, we have no public storefront or sales whatsoever, no dividends or salaries etc. I understand that one of the criteria of an 'active business' is receiving any other income, but by my understanding the director's loan is a debt, not an income.
Am I right in my belief that I can sensibly file as a dormant company until we begin trading?
Many thanks.
Directors' loans are "loan capital".
A company can have significant capital and still be dormant, so long as it's not doing anything with that capital. (Where this gets fuzzy is if, for instance, that capital starts earning interest at the bank - i.e. generating investment income.)
You need to register for Corporation Tax as soon as the company starts trading.
A company can have significant capital and still be dormant, so long as it's not doing anything with that capital. (Where this gets fuzzy is if, for instance, that capital starts earning interest at the bank - i.e. generating investment income.)
You need to register for Corporation Tax as soon as the company starts trading.
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