Dormant Accounts

[dormant]

Hi everyone!

I wonder if someone can guide me on an issue that I'm facing.

I am a tax resident in UK and have recently formed a new limited company. I'm the director and the beneficial owner of the company. Everything that the company does is done as nominee for me. As such, the company does not have any transactions of its own.

The company has a bank account in its name and has a PAYE scheme registered in its name and employs one person for office management. There is no income, the only income being the one that I put into it myself.

Is the company classed as a dormant company for tax and companies house purposes?

Many thanks
Dormant

[des8]

Hi and welcome

The company has no transactions ...everything the company does ??????????
There is no income.......the only income being...???????????

Those statements seem contradictory.
You appear to have a functioning company with an income

[dormant]

Sorry I wasn't clear on that. The transactions are general office expenses and payroll expenses. Because the company is not trading at the moment hence no income is being generated. The office expenses are met by funds that I transfer to the business bank account from my personal bank account. Would I need to file CT and accounts to Companies house? And would they be p&l and bs? Could I not file dormant accounts since the company is not trading. Or if I could have a nominee agreement between me and the company that the company is my nominee and all the above current transactions I mentioned are on my behalf? Is that technically possible until I start trading etc? For CT would the funds that I transfer be treated as income and pay taxes thereon?

[des8]

My limited understanding is that dormant companies cannot spend or receive any money, otherwise they become active for Corporation Tax purposes..
The smallest entry or transaction in the bank account will forfeit your dormant trading status, and I was advised (years ago) to close my business account to prevent the company being activated by the levying of bank charges!

Perhaps you should check with an accountant

[2222]

You have put money in, as share capital or loans, and the company has spent it on admin activity. I think you would have to check the exact definition of dormant company, because no company can be entirely inactive, as it has to file reports at companies house. Yet there are clearly dormant companies around.

if the amounts spent are tiny, you might just cross your fingers and file dormant accounts anyway, on the basis that nobody will take any notice.

I set up a company that has remained dormant, and each year there are filing fees at companies house, etc. I pay these personally although I assume they are really company expenses. I have been filing dormant accounts for a couple of years, and nobody has pulled me up on it. However, I have not been claiming personal tax relief on these expenses.

If if you are not planning on trading with this company for a while. You may be better to dissolve it and set up a new company without the PAYE system etc, and just pay any minor expenses out of your pocket.

[2222]

If the company name is particularly good, you may need to change the existing company's name before dissolving it.