Dormant for CT purposes

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If a company has ceased trading but has a cash balance and receives, say, £100 in interest per annum, then i) is it still dormant and ii) is a CT600 required?

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Replies (17)

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By TheTaxMan_
16th Apr 2024 19:40

i) No, the company is not dormant as there is movement in the balances.
ii) The company should submit a CT600 as there is income.

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Replying to TheTaxMan_:
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By Matrix
16th Apr 2024 19:57

Do you have a legislative reference for i) in the Tax Acts please?

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Replying to TheTaxMan_:
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By Matrix
16th Apr 2024 20:10

Where do you get i) from please? The question has nothing to do with accounts filing at Companies House but whether it is dormant for CT purposes.

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Replying to Matrix:
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By TheTaxMan_
16th Apr 2024 22:18

I thought (i) was in respect of the accounts, ignore it.

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By johngroganjga
16th Apr 2024 19:41

No it’s not dormant because of the interest income it receives, and yes of course it needs to submit a CT600. How else would it declare and pay tax on its interest income?

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By Paul Crowley
16th Apr 2024 19:54

I would call it dormant for CT purposes.
That was the limit being used 30 years ago for service charge companies. In those days it was always paper with accounts needed and HMRC needed to write letters. The letter to agree 'dormancy' always stated that if interest exceeded the limit that HMRC needed to be advised.
Chances are that it was all rubbish as the assets were in the beneficial ownership of the members.

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Replying to Paul Crowley:
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By Matrix
16th Apr 2024 19:55

I expect it will be more this year. Where do you get the limit from please?

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Replying to Matrix:
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By Paul Crowley
16th Apr 2024 20:03

The limit was what HMRC (HMIT) would state on the letter confirming that for five years no Corporation tax returns were required. It was a standard looking letter, and when I wrote I usually got the same letter as a reply with just names changed. I used to do lots of them, usually the prior agent was submitting Corp tax returns for really trivial sums.

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Replying to Matrix:
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By David Ex
17th Apr 2024 09:51

Matrix wrote:

I expect it will be more this year. Where do you get the limit from please?

https://www.gov.uk/hmrc-internal-manuals/cotax-manual/com23110

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Replying to David Ex:
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By Paul Crowley
17th Apr 2024 12:33

The figure of £100 there is for the actual tax liability. So £500 of interest would be OK for a club etc

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By Matrix
16th Apr 2024 19:54

Thanks. But if there are ongoing expenses such as bank charges, accounting fees then no entries for these as not trading?

It may sound like I am an idiot but I need to determine what to do about a CT600 I have received as part of handover info. And set ongoing fees. As I charge more than the £100 for a CT600. And whether the client has been badly advised.

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By Geoff56
17th Apr 2024 09:30

Why not simply phone HMRC's corporation tax dept., explain the situation and see if they will require a CT600? (I'm assuming that no 'notice to file' has been issued for the period in question.)

Like Paul Crowley, I do recall that HMRC used to operate a de minimis threshold of £100 for company tax returns, although I don't know if they still apply that.

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Replying to Geoff56:
Intercity
By Mr Hankey
17th Apr 2024 09:43

"simply", "phone" and "HMRC"...

...in the same sentence. Love it!

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Replying to Mr Hankey:
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By Geoff56
17th Apr 2024 11:12

Fair comment!

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Replying to Geoff56:
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By Matrix
17th Apr 2024 11:36

I have no problem calling the CT helpline, I was on the phone to them earlier but cannot ask them since I am not agent yet. This question was asked so I can quote for the extra work if necessary.

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By M G Weemys
17th Apr 2024 11:36

Had a similar situation only last week with a service-charge company. Interest income would have resulted in a tax charge of £102. It had been classed as dormant for the previous 10 years for which accounts had been prepared but with no CT600 required. I rang and asked if it was still necessary to formally advise the threshold of £100 had been so marginally exceeded and a CT return would now be required. (An assurance had been given to HMRC that a change in the company's tax position would be advised when the dormant status was initially permitted). I was told that a return WAS required. Crazy!

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Replying to M G Weemys:
DougScott
By Dougscott
17th Apr 2024 12:40

M G Weemys wrote:
< I was told that a return WAS required. Crazy!

What do HMRC know anyway?

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