Trading and non-trading companies
- 15th September 2022
- Posted by: admin
- Category: News
HMRC consider a company to be non-active when the company has not yet become active or started trading. The company, whilst not yet active for CT purposes, can still conduct activities (known as 'pre-trading activities') or incur costs (known as 'pre-trading expenditure').
HMRC’s guidance states that set-up activities or expenditure that are not considered trading by HMRC for CT purposes include:
- preliminary activities such as writing a business plan or negotiating contracts;
- preliminary expenditure such as incurring costs with a view to deciding whether to start a business.
When the company becomes active (usually after carrying on a business activity), HMRC must be notified. This needs to be done within 3 months of a company starting their tax accounting period. The best way to notify HMRC is by using the online registration service.
When a company has previously traded and then stops trading it would normally be considered as dormant. A company can stay dormant indefinitely, however, there are costs associated with doing this and certain filings must still be made to Companies House.
This might apply if a company is restructuring its operations or wants to keep a company name, brand or trademark. The costs of restarting a dormant company are typically less than forming a new company.
Source: New feed