I have a company which received approx £500.00, gross, bank interest in the year to 30/4/2006. I believe this company can be classed as dormant as there are no other transactions in the company. Will the company have to pay corporation tax on this interest?
Any comments would be appreciated.
Jan
Jan Thompson
Replies (6)
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Dormant Company
Thanks for your comments, the interest has been earned on undistributed profits from when the company was trading.
Not dormant
Receipt of interest is an accounting transaction, and that means it cannot be treated as dormant.
Moreover it is likely a closed investment company and pays corporation tax at 30% - assuming there is any profit to tax once to cost of preparing the accounts is taken into account :-)
NeilW
Not trading isn't dormant
I would have thought the receipt of the interest would be classed as a "significant accounting transaction" under S249AA of the Companies Act and the company is not, therefore, dormant.
The company presumably isn't trading, although that isn't the same as being dormant.
And, yes the interest is subject to corporation tax.
Jan
I would be happy to prepare, submit and deal with any HMRC queries on the company's tax return for £495.
Ask HMRC
Why don't you write to your local inspector and ask them if you need to submit CT600's in view of the low level of corporation tax.
HMRC have recently taken the view that if the annual corporation tax of clubs/property management companies is less than £100 then they will prevent the issue of a notice to file a return and that the company can be treated as dormant.
It's worth asking in your case.
You will of course still have to submit accounts to Companies House.