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"Dormant" or "Trading" for a Limited Company

To register as CT or not in first year to claim loss?

Didn't find your answer?

 

Registered limited company June 2020,  acquired office equipment and few capital assets worth 2000 GBP, No income, no stock, and no trading yet.

Am I a "Dormant" or "Trading"? It matters if considered reading I need to register for CT for all this time to claim expenditure as a loss.

Looking forward to your answers, and those who have nothing better to do but comment passive-aggressively unrelated to the question asked. I get it, it has been a bad year.

 

Regards

 

 

Replies (60)

Comments for this post are now closed.

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By Tax Dragon
05th Mar 2021 06:00

Based on the facts given - that there's no trade - it's not trading. Trading means trading - having a trade. Further, you don't have a trading loss if you're not trading.

I know I say apply law not logic, but here it's both.

Btw, if a non-trading company starts trading, it starts a CT Accounting Period. There are rules (look them up) about the tax treatment of (revenue, capital) expenditure incurred before trading starts. These rules are where you will find the available legal reliefs; you don't need to make up your own rules.

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By paul.benny
05th Mar 2021 08:41

Also not dormant for statutory accounts purposes. The Companies Act sets out the criteria for a company to be considered dormant.

And, whilst not trading *yet*, you are several months off the default year end, and tax filings are based on your accounting period. Assuming you've not changed that to an earlier date, the question is somewhat moot right now.

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Stepurhan
By stepurhan
05th Mar 2021 08:43

Quote:
Looking forward to your answers, and those who have nothing better to do but comment passive-aggressively unrelated to the question asked. I get it, it has been a bad year.
If you think people getting narked at non-accountants abusing the anonymous function and seeking free advice (though it is at least a genuinely simple question, though one that a little thought would have made the question unnecessary) is just because it has been a "bad year" you are sorely mistaken.
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Replying to stepurhan:
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By kia2094
05th Mar 2021 09:31

Thank you for proving my point.

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Replying to kia2094:
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By Tax Dragon
05th Mar 2021 10:02

Uncalled for.

I read your OP as meaning you'd had a bad year. I've reread it as instead meaning you will put up with 'abuse' from people who have had a bad year.

For some people, it has been worse than bad. Those of us, like me, who are more fortunate... well, let's hope enough such people remember the communities of which we are part, and help out where we can.

Anyway, whatever you meant, it's no excuse for you to be rude or insensitive. An apology is called for.

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Replying to kia2094:
Stepurhan
By stepurhan
05th Mar 2021 10:03

Any response would have "proved" your point, since your "point" is based on a false assumption.

Thanks for discarding your anonymity though.

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Replying to stepurhan:
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By kia2094
05th Mar 2021 10:23

You bet, it was not my intention to be anonymous, new to the forum still learning about the features.

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Replying to kia2094:
Stepurhan
By stepurhan
05th Mar 2021 10:27

Not sure how you can accidentally end up using anonymous, since the default is not to do so.

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Replying to stepurhan:
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By kia2094
05th Mar 2021 11:04

I'm just fascinated by the degree you care to reply in this section, unrelated to the topic and getting upset that I asked in advance not to get involved if your answer is unrelated.

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Replying to kia2094:
Stepurhan
By stepurhan
05th Mar 2021 18:04

I'm fascinated by the degree to which you think you have the right to dictate responses in a FREE forum.

But hey, you're the one that is going to end up in trouble because you decided a free online forum and an HMRC helpline was better than paid-for bespoke advice. Good luck with that. With your attitude I think you'll need it.

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By Duggimon
05th Mar 2021 08:45

What loss? None of the expenditure you've listed results in P&L activity.

If you have a loss you're trading, if you're not trading you don't have a loss. Registering for CT is not a decision, you do it once you're trading.

Are you sure you aren't registered for CT? I haven't ever registered a company for CT (started taking on my own clients about 5 years ago) and every company I've registered was automatically registered for Corporation Tax without any intervention from me, the few for whom that was inappropriate I had to write to HMRC and have the registration rescinded. HMRC get an automatic feed from Companies House.

Also, I would add, dormant for CT purposes is not dormant for CH purposes and with your activity so far you'll have accounts to do come the year end.

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Replying to Duggimon:
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By kia2094
05th Mar 2021 09:37

Thank you for the reply. No, I checked Gov login, it's not registered for CT yet, my other company is as you said, it was done by default which is fine since it actually had a little income.

I see I clearly missed a big piece of information, so technically I don't need to register for CT if no trading, but still liable for CH accounts.

How does one account for what I have spent so far in the next accounting year? Based on the suggestion it is considered as pre-trading expenses?

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Replying to kia2094:
By Duggimon
05th Mar 2021 09:48

edit: in light of your reply to Stepurhan above I've decided to remove my reply.

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Replying to Duggimon:
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By kia2094
05th Mar 2021 10:04

Please do.

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Replying to kia2094:
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By Tax Dragon
05th Mar 2021 09:54

Why at this stage do you need anything more than a balance sheet? (Since there' s no trade and no source of income, logic says you can't have anything more than a balance sheet even if you wanted it... but I'd be the first to acknowledge that logic has its limitations, so don't go by what I say - it's not work I do.)

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Replying to Tax Dragon:
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By kia2094
05th Mar 2021 10:13

Thank you for the reply. Part of it is the FreeAgent software confusing me, so far all the office expenses had been recorded as P&L.

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Replying to kia2094:
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By Tax Dragon
05th Mar 2021 10:51

Thanking me is not apologising to stepurhan, so I'm out. (But, if you can't get your bookkeeping right, there's no chance you'll get your accounts right; and if you don't get your accounts right, you won't get your tax right. So if you want some free advice from me before I go, it's: engage a local accountant.)

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Replying to Duggimon:
A Putey FACA
By Arthur Putey
05th Mar 2021 11:07

Although HMRC seem to take a random approach to opening CT periods even if you have not told them you are trading.

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By paul.benny
05th Mar 2021 09:50

I don't know why you've chosen to have two companies - but you've created more cost and complexity and may have corporation tax to pay that could have been avoided/delayed.

I think it's time say that you need an accountant.

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Replying to paul.benny:
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By kia2094
05th Mar 2021 10:20

Thank you for the reply. I agree but here is the problem, accountant advice varies significantly based on what I have been in contact with. The best solution I see is to seek what the law is and then go according to that since at the end of the day I am the one responsible.

The question still remains, do I need to register for CT if no income at the end of the accounting year but there are office expenses and capital assets. So far what I gathered is CH accounting is a must but CT maybe not. Then the question is, how can I claim these expenses next tax year

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Replying to kia2094:
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By paul.benny
05th Mar 2021 10:39

I've no idea what advice you've previously been given, the expertise/qualification of the adviser, nor the information they were presented with. But if you doubted their advice, you should have challenged them or sought further explanations.

If you want to rely on the legislation, it's all available from legislation.gov.uk. And HMRC manuals are also readily available online.

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Replying to paul.benny:
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By kia2094
05th Mar 2021 11:17

I agree.

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By Paul Crowley
05th Mar 2021 10:30

One co started June 20
Other co Started Dec 20
I have of course made a an assumption on name of Kiatech

A bit early to be considering any of this
Neither has existed for a year yet

Still as a doctor I am certain that you need to do research early
But if that research is asking on a public forum because you believe a public forum (which you became a member of despite Zero accounting knowledge) will give better results than talking to your local accountant then I worry about your research methodology.
Would you accept that we should ignore medical advice and go to Drweb join and comment thereon?

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Replying to Paul Crowley:
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By kia2094
05th Mar 2021 11:19

Information is king, doesn't matter the field. It is one's judgment to decide if the information is coming from someone who is genuinely sharing their experience and who has nothing better to do but the room around here.

If that is one's goal, I cant stop that, and I have the patience to ignore that until someone truly shares their experience.

May I point out Drweb is Russian based antivirus software company, so I highly advise against getting your medical advice from there.

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Replying to kia2094:
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By Paul Crowley
05th Mar 2021 11:59

I do not think you have adequate experience in the field to determine whether a responder ' truly shares their experience.'

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Replying to Paul Crowley:
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By kia2094
05th Mar 2021 12:09

I think I do, and if I don't, why would you care? You are starting to sound hurt like stepurhan.

As I said, I get it it's been a bad year. And I predicted right on point the nonrelated advice and commends started pouring in.

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Replying to kia2094:
By Duggimon
05th Mar 2021 12:45

The comments are a direct response to your attitude, it's nothing to do with a bad year for anyone. You get what you give.

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By paul.benny
05th Mar 2021 11:48

@OP To give a (probably flawed) analogy from your own profession, antibiotics can be an excellent treatment. But they're not helpful for a person with a viral infection and may even be harmful.

You've made a potentially unwise decision in opening a second company, quite possibly compounding an unwise decision to open the first company. And you are misclassifying expenditure in your free software.

You can't just understand tax or accounting by reading legislation. You need an accountant.

You need an accountant

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By alialdabawi
05th Mar 2021 12:08

To the OP,

My contributions to these forums are few, though I hope useful &/or entertaining.

Having followed many threads where the OP descends to a condescending/accusatory/ungrateful level, it is this thread which has left me with a bad taste.

To begin with, the final paragraph in your question was unnecessary, and perhaps with the hindsight of your subsequent posts, proved to be a sign of things to come.

The regulars of this forum who shared their time and knowledge should be appreciated, yet it took you only three replies to descend into your brand of (passive?) aggression, which is simultaneously unnecessary, out-of-line, disrespectful, distasteful and a disgusting response to those who made effort to respond to your post.

I feel like if you were to come to my till asking to break a £10 note, you would punch me in the nose for giving you £1 coins, because you only wanted 50p coins - the responses you received were a good start and you need to learn some diplomacy and practice some kindness and patience, and use the answers you had already received as a foundation for further probing and you would likely have teased out the answers/guidance eventually, had you shared more information and been more tactful.

On the basis that you added the final paragraph within your question, you *may* already have been familiar with this forum's views of such behaviour, and your paragraph showed that you anticipated that, which in turn perhaps indicated that your intention all along was to get the answer you wanted or else turn aggressive.

We the accounting professionals of the forum should perhaps have seen this coming based on your final paragraph of the original post, and perhaps it is us who should learn to see this as the best example of what we have already been discussing recently - to ignore such posts/posters and to not even dignify them with responses.

Your point about CT not showing on your Gov login may be moot - it could well be the case that your company has a requirement to file a CT return, but that your Gov login is not setup/linked to this company's CT records. There is a process to follow to link the portal and the CT registration, which practicing forum members will know about, but which you *may* not, hence your Gov login not showing CT is an inaccurate indicator of your company's requirement to file a CT return.

As has already been said:
- Get yourself an accountant. You have a company (or 2) already - surely with the intention to earn profits - and aside from the corporate responsibilities and potentially having to deal with multiple taxes, you may well benefit from the guidance and mentoring (or compliance services, at the very least), of an accountant for your personal taxes - and eventually much more
- Demonstrate some respect for the forum - which you are now also a part of. Swatting away those with a knowledge and experience base superior to yours, stinks of entitlement and arrogance, and you would do well to extend an apology and start to rebuild your own respect on these pages
- Stop using anonymous and read through the features of the site before using them
- Recognise the value of knowing your own limits - of knowledge, experience, other - it will serve you well in life generally and as the owner of new business(es)

You mention - with mucho gusto - that you have the patience to ignore until someone truly shares their experience. Yet you have demonstrated no patience in your interactions on this thread. You have also demonstrated a level of hypocrisy by pointing out your fascination at responses unrelated to the topic, yet you respond to rhetorical points such as Drweb. I do believe that this behaviour is avoidable on your part and that if you were to avoid such behaviour, you would receive an entirely different set of responses to any future questions you may pose.

As mentioned earlier in my reply (apologies to the regulars and professionals for a long one), I have followed many a thread which has had the OP throwing tantrums, but this one being (IMHO) pre-meditated (with the OP final paragraph - and subsequent posts) just got me riled - hopefully I have put my thoughts down in a rational and positive manner.

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Replying to alialdabawi:
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By kia2094
05th Mar 2021 13:16

I'm going to honest I didn't read all of whats written since I have a life, but I get what you are saying.

My comment was based on my last experience, I thought since we are all adults here, if you have a bad day it will prevent you from posting unrelated replies. I see how that would have invoked a few of you, for example, stepurhan.

But to be honest, some of the advice has been great such Tax Dragon, paul.benny , and it's not fair to treat you poor especially in your own space, I apologize for that.

I'm just getting tired of being the bigger person, if I let it go, they will feel like they can say whatever they want, and if I answer back, you feel I am entitled, which is it? Granted whoever commented was an adult and they decided to engage by will. I was just matching your energy, which is stupid since there is no winning with the internet.

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Replying to kia2094:
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By kia2094
05th Mar 2021 13:29

If anyone has a question, doubt about CT, or doubt about your accountant advice, please call hmrc at 0300 200 3410.

They were very professional and happy to walk you through all of it with no drama. I highly recommend it.

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Replying to kia2094:
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By kia2094
05th Mar 2021 13:28

If anyone has a question, doubt about CT, or doubt about your accountant advice, please call hmrc at 0300 200 3410.

They were very professional and happy to walk you through all of it with no drama. I highly recommend it.

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Replying to kia2094:
By Duggimon
05th Mar 2021 13:30

We will all be delighted if you choose to take all your tax advice from the people whose job it is to collect as much tax as possible.

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Replying to Duggimon:
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By kia2094
05th Mar 2021 15:18

I thought you "decided to remove your replies"?

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Replying to kia2094:
By Duggimon
05th Mar 2021 16:03

Quote:

I thought you "decided to remove your replies"?

I've you're going to quote me quote me correctly. I edited that post to remove the helpful reply I'd written because I think you're being an [***]

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Replying to kia2094:
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By paul.benny
05th Mar 2021 13:41

Quote:

But to be honest, some of the advice has been great such Tax Dragon, paul.benny , and it's not fair to treat you poor especially in your own space, I apologize for that.

We're the people who advised you to get an accountant. That advice stands, however useful you may find the HMRC helpline.

As duggimon has hinted, HMRC may guide you on how much tax you need to pay. But they won't tell you could have arranged your affairs to pay less tax.

I'm out.

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Replying to I'msorryIhaven'taclue:
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By Paul Crowley
05th Mar 2021 14:24

Well according to that site
Kia2094 has no reputation

second link is the one that OP should phone HMRC about.
I think they would be very interested in advising OP

And they kept saying get an accountant
And they did not believe that Op really had 2 accountants

THAT IS A MEAN SITE

Cannot blame Op for giving up on that one and trying elsewhere
Assumed the self employment/sole trader accounts are DIY. If not then you need to change accountants soonest if he advised you to do what you are doing

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Replying to I'msorryIhaven'taclue:
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By justsotax
05th Mar 2021 14:10

that was quite an amusing read.....

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Replying to justsotax:
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By kia2094
05th Mar 2021 15:19

Agree

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Replying to kia2094:
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By I'msorryIhaven'taclue
05th Mar 2021 15:33

As I go throught the pages, all I keep seeing are your non-sense, passove aggresive replies: I find it amusing.

Its simple, either add to the conversation, of mind your own bussiness.

https://www.contractoruk.com/forums/accounting-legal/140500-fixed-assets...

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Replying to I'msorryIhaven'taclue:
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By kia2094
05th Mar 2021 15:39

If I remember correctly, that was for someone like you who had nothing to offer yet couldn't mind their own business.

Perhaps you can learn from that advice.

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Replying to kia2094:
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By I'msorryIhaven'taclue
05th Mar 2021 17:01

It was for someone exactly like me who rumbled that you keep asking the same questions over and over, and whose advice to engage an accountant didn't go down well with you.

Imagine how frustrated you'd get if someone with dodgy teeth repeatedly asked how to fit DIY dental implants, every step of the way. What might your advice be? And what would you think if their response was mind your own business, you passive aggressive?

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Replying to I'msorryIhaven'taclue:
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By kia2094
06th Mar 2021 12:53

That is incorrect, but there is a point of view I notice I missed since that message was posted.

First, that was not my post, I was from a beginner poster, who mentioned he has an accountant already. I can see how he was trying to gather more info to educate himself.

The accountant kept interrupting and leaving one-liner comments indicating he may be not telling the truth about having an accountant, which was not unnecessary and I have experienced that too.

I saw him in multiple different pages doing that, so it looked like a habit of him over and over, which was annoying. I don't understand, if you are here to help, why would you like to put people down in their own postings?

I definitely credit him because after realizing what he has done, he acknowledged it and repeated his advice so it won't be missed in his comments. That is a very mature decision, I can see how one can get caught in their patterns. Perhaps we can all learn from him.

As I mentioned earlier, info is king, I would ask my questions over and over until I'm satisfied with it, no matter how many accountants or random people it will take, I don't understand why this is affecting you? My advice is the same for all other professions, especially those that are not legally liable for the outcome.

And to you, if you think getting engaged in a public domain to shame people of their past comments rather than helping is a good idea, then great I wish you the best but please don't get got it the pattern to a no returning point.

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Replying to kia2094:
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By I'msorryIhaven'taclue
06th Mar 2021 12:46

Now you've hurt my feelings!

I do hope that wasn't your intention.

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Replying to I'msorryIhaven'taclue:
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By I'msorryIhaven'taclue
06th Mar 2021 13:38

Kia2094 wrote:

That is incorrect, but there is a point of view I notice I missed since that message was posted.

First, that was not my post, I was from a beginner poster, who mentioned he has an accountant already. I can see how he was trying to gather more info to educate himself.

The accountant kept interrupting and leaving one-liner comments indicating he may be not telling the truth about having an accountant, which was not unnecessary and I have experienced that too.

I saw him in multiple different pages doing that, so it looked like a habit of him over and over, which was annoying. I don't understand, if you are here to help, why would you like to put people down in their own postings?

I definitely credit him because after realizing what he has done, he acknowledged it and repeated his advice so it won't be missed in his comments. That is a very mature decision, I can see how one can get caught in their patterns. Perhaps we can all learn from him.

As I mentioned earlier, info is king, I would ask my questions over and over until I'm satisfied with it, no matter how many accountants or random people it will take, I don't understand why this is affecting you? My advice is the same for all other professions, especially those that are not legally liable for the outcome.

And to you, if you think getting engaged in a public domain to shame people of their past comments rather than helping is a good idea, then great I wish you the best but please don't get got it the pattern to a no returning point.

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My photo
By Matrix
05th Mar 2021 14:47

You have chosen the wrong categories in FreeAgent if the capital items are showing in your P&L. HMRC aren’t going to advise on accounting matters. Nor are FreeAgent. Try the list of accountants on their site, there are some who compete on price so you could get a bargain.

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Replying to Matrix:
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By kia2094
05th Mar 2021 15:45

Thank you for the reply. The office expenses are still under P&L still, not the balance. This is not an entry to the Freeagent problem.

Depends on what you need, you can get the info from HMRC if it's regarding what the law is, I still highly recommend calling HMRC. Rest as our adult and professional mannered accountants in the room mentioned is for the accountant to figure out.

But you still need to know the law, and yes unfortunately in my experience you can't get it straight out of accountants, especially when legally they are not liable for the outcome.

I'm out, have a great weekend everyone, this was certainly entertaining.

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Replying to kia2094:
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By Cheshire
05th Mar 2021 15:50

[quote= '' you can get the info from HMRC if it's regarding what the law is''

HMRC staff do not know the legal position. You are completely mis-informed in this regard.

'' yes unfortunately in my experience you can't get it straight out of accountants, especially when legally they are not liable for the outcome.'' So why oh why are you asking all the Accountants on here?

Bizarre.

Your attitude stinks. So rude. But thanks for the entertainment.

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By kia2094
05th Mar 2021 15:52

You are welcome.

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