HM Revenue & Customs (HMRC) will treat your limited company as ‘active’ and officially trading as soon as you’re:
- carrying on a business activity such as a trade or professional activity
- buying and selling goods with a view to making a profit or surplus
- providing services
- earning interest
- managing investments
- receiving any other income
It’s important to understand that you’re active WELL before you start making actual sales – so you need to plan accordingly and make sure you’ve registered for things like corporation tax, PAYE and VAT and that you’re meeting your responsibilities.
Is your company dormant or non-trading?
Dormant companies and non-trading companies are one and the same thing, although Companies House and HMRC actually define dormant companies in slightly differing ways.
- For HMRC, your company is dormant if:
- It’s a new company that’s not yet trading.
- It’s an ‘off-the-shelf’ or ‘shell’ company held by a company formation agent who’s intending to sell it on.
- It’s a company that won’t ever trade, having been formed to own an asset such as land or intellectual property.
- It’s an existing company that’s traded before, but isn’t currently trading.
- It’s a company that’s no longer trading and is about to be taken off the Companies Register.
- For Companies House, your company is dormant if it’s not made any significant transactions during an accounting year.
If you need help deciding whether your company is active or dormant, give us a call on 01454 300 999 or drop an email to firstname.lastname@example.org