COM1040 - Accounting periods: company accounting periods: dormancy

This subject is presented as follows

General 
COTAX action for S55 cases 
COTAX action for automatically extended cases 
Action in the office responsible for CT processing 

General

A company is dormant when it

• Does not receive any profits or income

• Holds no assets capable of producing any profits, income or gains

As a relaxation to this rule

• You can treat a company that merely exists to hold chargeable assets as dormant

• The assets are unlikely to produce any profits, income or gains in the near future

(This text has been withheld because of exemptions in the Freedom of Information Act 2000)

S55 FA 2004 (COM40078) introduced new obligations for dormant companies coming into the charge to CT.

You can use Function MAPD (Maintain AP Dates) to set up a future period of dormancy that ends on any date, including 31 May (as long as it is followed by a live AP) if you know that

• A new company, which has been dormant since incorporation, is coming within the charge to CT for the first time

• A previously active but currently dormant company intends to come back into the charge to CT

COTAX helps you identify companies that may not have met their S55 obligations.

Notes:

COTAX reviews these cases on an annual basis and automatically extends the dormancy period by 5 years.

Note: When you set up a dormancy period, if the end date is no more than 180 days in the future you will be able to inhibit the automatic issue of form CT204. This applies to all future dormancy periods.

Top of page

COTAX action for S55 cases

Each day COTAX scans its database to identify companies with a future dormancy period that ends within the next 28 days and is followed by a live AP.

COTAX then

• Issues form CT204 to the company
• Automatically records the date that the form is issued and displays that date in Function VTPR (View Taxpayer)
• Enters the case onto Work List DRCL (Dormancy Review Case List) for review. For more information about the work list and how to deal with cases on it see section ‘Accounting Period Work Lists’ (COM2000 onwards) in this business area.

Top of page

COTAX action for automatically extended cases

COTAX scans its database annually to identify companies with a dormancy period

• Ending on 31 May of that year
• Which is not followed by a live AP

It issues a form CT204 to each of those companies and

• Automatically extends the dormant period by 5 years

• Enters the case on Work List DRCL (Dormancy Review Case List) for review

For more information about the work list and how to deal with cases on it see section ‘Accounting Period Work Lists’ in this business area.

Top of page

Action in the office responsible for CT processing

You may receive correspondence that suggests a dormant company has commenced or recommenced trading. The correspondence could be

• Form P510 from the Employers Section advising you of a new PAYE scheme

• A general letter from the company or the company’s agent

You should deal with the correspondence and then pass the papers to a Technical Caseworker to

• Review the correspondence
• Consider S55 FA 2004 implications
• Make a risk assessment and decide whether to

• • Leave the existing dormancy period as it is

• • Or
    

• • Use Function MAPD (Maintain AP Dates) to amend the AP record to create one or more live APs, resulting in COTAX issuing a notice to deliver (Word 29KB) 

For a list of forms relevant to this subject, see COM1041.

For a list of functions to use in particular situations, see COM1021.

For legislation applying to this subject, see COM1022.