Dormant Co registered by client with CoHo - CT?

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Hi

A client has registered a dormant company with Companies House (absolutely nothing going through this, registration was simply to secure the name which might be needed in the future). 

 

As part of a client registering a company, I'm aware that they have an option to register for CT (although I'm not sure how this is phrased in the forms they complete, just that most seem to do this and a UTR appears in the post afterwards). 

 

As this company has been registered as dormant, it seems reasonable to assume that the registration did not make the prompts for registering for CT as they will not be required to submit CT returns and there is no need for the company to have a UTR as they are not yet a taxpayer. Unfortunately HMRC guidance seems to skirt around the question and makes it clear when a return is required/not required, but doesn't answer the question a UTR is needed for every company (including dormant companies) or only companies where there is a reason that a CT return would be required. 

 

Please could someone with more practical experience confirm that there's no requirement for a company to get a UTR before it becomes active for CT purposes, and that the point of getting a UTR would be the point the company becomes active for CT purposes?

 

Sorry for the very practical day-to-day question. If anyone has any recommended reading around HMRC processes and practical issues I'd gladly hear it!

 

Thanks

Replies (21)

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By JB101
13th Jun 2024 11:49

I don't understand how you can register a company as dormant. You can only register (or not) a company.
If it is dormant, dormant accounts can be filed at Companies House.
HMRC will happily accept no CT returns needed if no (taxable) activity - as long as you tell them - but I'm pretty sure they issue UTRs automatically.

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Replying to JB101:
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By unsure_accountant
13th Jun 2024 12:00

Sorry, bad wording on my side.

Company is dormant and will submit dormant accounts to CoHo as usual.

As far as I'm aware, registering for CT is an optional part of the company registration that is done online by the client so hasn't necessarily been done (and questions leading up to this may have made it so this was not even clearly shown as an option).

Question boils down to: If the client is sure they haven't received a UTR in the post, do we need to get one now or do we just leave this and register for a UTR at a later date when the company is no longer dormant and needs to do CT returns?

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Replying to unsure_accountant:
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By Paul Crowley
13th Jun 2024 13:23

Disagree.
See my posting below.

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Replying to Paul Crowley:
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By unsure_accountant
13th Jun 2024 13:50

I'm not sure what you are disagreeing to, as my post was a question.

However, your link is to notify HMRC that a company is dormant and the form itself requires the UTR. Client hasn't received a UTR (and is usually well organised), so the form can't be done.

I've requested reminder of the UTR using the company details, as suggested by another poster, which hopefully does end up in a UTR making itself known!

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Replying to unsure_accountant:
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By Paul Crowley
13th Jun 2024 14:13

It was sent by post 3 to 6 weeks after Incorporation. A5 buff envelope with HMRC on it.
If he does not have then he needs to call HMRC CT helpline. HMRC will know it, and can tell him with just the Co House Reg number.
Or he can wait until HMRC send a notice to file about a year after incorporation
It goes to the registered office of the company.

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Replying to unsure_accountant:
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By Paul Crowley
13th Jun 2024 14:18

'As far as I'm aware, registering for CT is an optional part of the company registration that is done online by the client so hasn't necessarily been done (and questions leading up to this may have made it so this was not even clearly shown as an option).'
They all get issued a UTR
Registering for CT is not optional, It happens as part of setting up a company.
That is what you are saying that is wrong.
I have had several clients claim they never received it, only to find it later in they records when doing the accounts.

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Replying to JB101:
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By Paul Crowley
13th Jun 2024 13:19

+1
Sent out in post by Co House but in an HMRC buff envelope

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By Mr_awol
13th Jun 2024 11:54

Company formations isnt exactly my thing and i CBA to look stuff up but i think the following is fairly accurate:

It used to be that you registered a company, and then had to tell HMRC if/when if began trading (CT41G from memory).

However at some point, this appears to have changed, and now all new companies get registered for CT automatically(?). You can then have the record marked dormant if required, and need to remind HMRC every now and then (5 years?)

Often this leads to a late filing penalty form HMRC because nobody thinks about the tax as the company is dormant. The good news is that if you get one of those you can normally appeal it successfully by just sending a copy of the dormant accs filed at Co Hse.

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Replying to Mr_awol:
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By unsure_accountant
13th Jun 2024 12:59

This is pretty much my experience too.

I'm used to dealing with existing dormant companies and the periodic returns (and inevitably being called on for when a dormant company that we don't act for but is linked to a client doesn't file a return.....), which is probably what is making me feel like even a dormant company should have a UTR!

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Replying to Mr_awol:
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By thevaliant
17th Jun 2024 00:40

I'm pretty sure the 'automatically registered by HMRC for corporation tax' happened a long time ago now.

When I took on my flat management company in 2004, a letter from HMRC arrived within weeks telling me about the need to file a return.

That was twenty years ago. I don't think I've ever known a period when you weren't automatically registered by incorporating.

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By AndyC555
13th Jun 2024 12:08

Companies House notify HMRC of all company formations and a UTR is automatically issued by HMRC. I think there's some page on the internet where you can inform HMRC that the company is dormant, so they don't issue a notice to file and so no tax returns are required.

A company can be formed at Companies House as dormant inasmuch as the SIC code 99999 can be chosen. If a company is non-trading but still has financial transactions (such as receiving and paying dividends) then strictly SIC code 74990 should be chosen but I doubt Companies House really care.

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Replying to AndyC555:
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By unsure_accountant
13th Jun 2024 12:56

I have no idea what the client put as SIC codes etc as they did the registration themselves.

I agree about the UTR usually being issued automatically, but in this case nothing has arrived and I wondered if this could be related to the company being dormant.

Unfortunately, there's no way to tell HMRC that the company is dormant without a UTR so the question boils down to whether a company needs to actively pursue a UTR if they haven't got one and are dormant.

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Replying to unsure_accountant:
DougScott
By Dougscott
13th Jun 2024 19:07

Have you (or the client) actually tried to ring HMRC and ask if the company has a UTR?

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Replying to unsure_accountant:
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By BrianL
14th Jun 2024 09:34

"I have no idea what the client put as SIC codes etc as they did the registration themselves." Search at Companies House - https://www.gov.uk/get-information-about-a-company

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Replying to Cazzie B:
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By unsure_accountant
13th Jun 2024 12:54

To do this you need a UTR, my whole question revolves around the company not having a UTR yet and whether it is necessary to get one/whether one will have been issued.

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Replying to unsure_accountant:
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By AndyC555
13th Jun 2024 13:39

It's almost certain that a UTR will have been assigned. HMRC will cheerfully issue a letter with this and there's an online form (search 'lost company tax reference').

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Replying to AndyC555:
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By unsure_accountant
13th Jun 2024 13:48

Perfect! We've input the company details so hopefully this generates a letter with a UTR so we can get on with agent authority/making sure that HMRC have the company as dormant.

If no post is received it's maybe a pointer that there is no UTR, but for now this feels like progress.

Thanks!

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Replying to unsure_accountant:
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By Paul Crowley
13th Jun 2024 14:21

It refers to find, not issue a UTR.
THE UTR EXISTS.

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By Paul Crowley
13th Jun 2024 13:22

There is a quick online form to advise HMRC of 'dormancy'.
The daft form writers used a technical term incorrectly.
https://www.gov.uk/tell-hmrc-your-company-is-dormant-for-corporation-tax

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By richard thomas
14th Jun 2024 21:04

Just a few points about the legal position, but first to note that gov.uk does suggest that issuing a UTR is automatic, whether or not a company is “registered for CT” when it is set up at Companies House.

Paragraph 2 Schedule 18 FA 1998 says:

Duty to give notice of chargeability

(1) A company which—

(a) is chargeable to tax for an accounting period, and

(b) has not received a notice requiring a company tax return,

must give notice to an officer of Revenue and Customs that it is so chargeable.

(1A) But a company is not required to give notice under sub-paragraph (1) in respect of an accounting period if for the period—

(a) all the income on which it is chargeable to tax consists of payments on which it bears income tax by deduction,

(b) the company has no chargeable gains, and

(c) having deducted the income tax mentioned in paragraph (a) at the fourth step
in paragraph 8 (calculation of tax payable), the amount of tax payable for the period is nil.

(2) A notice required to be given under this paragraph must be given within twelve months from the end of the accounting period.

Section 55 FA 2004 adds:

Duty of company to give notice of coming within charge to corporation tax

(1) A company must give notice to the Board—

(a) of the beginning of its first accounting period, and

(b) of the beginning of any subsequent accounting period that does not immediately follow the end of a previous accounting period.

(2) The notice required by this section—

(a) must be in writing;

(b) must state when the accounting period began;

(c) must contain such other information as may be prescribed;

(d) may be given to any officer of Revenue and Customs; and

(e) must be given not later than three months after the beginning of the accounting period.

(3) “Prescribed” in subsection (2)(c) means prescribed by regulations made by the Board.

(4) A company that has a reasonable excuse for failing to give notice as required by this section—

(a) is not to be regarded as having failed to comply with this section until the excuse ceases, and
(b) after the excuse ceases is not to be regarded as having failed to comply with this section if the required notice is given without unreasonable delay after the excuse ceases.

(5)In this section—
(a) “accounting period” means an accounting period for the purposes of corporation tax;

(b) “company” means a body corporate and does not include an unincorporated association or a partnership;

The upshot of this is that there is no need (in the sense that the company cannot be penalised for a failure to comply) to notify HMRC of anything (whether by so-called “registration” for CT or otherwise) unless the company starts to trade or has other income and chargeable gains chargeable to CT.

If it does so it must (a) notify HMRC within three months of the start of its first accounting period when that period began and any other information proscribed and (b) must notify chargeability to CT within 12 months of the end of the accounting period in which it becomes so chargeable.

The penalties for failure to comply are different. The FA 2004 obligation can lead to a penalty under s 98 TMA which can only be imposed by HMRC staring proceedings before the FTT. In other words an expired member of the Anatidae. The paragraph 2 Schedule 18 obligation is within Schedule 41 FA 2008.

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