ASK & DISCUSS
INDEXWhen do I need to register for Corporation tax?
6 years, 5 months ago - Arno Crous
I have recently started a limited company for the production of a short film that I am working on. At what point do I need to register for Corporation tax if I don’t expect any income stream from this for the foreseeable future (and potentially never)? Is it okay for the company to be considered “inactive” while my only financial activity is spending money on people, services and things?
Many thanks in advance!
Arno
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6 years, 5 months ago - Marlom Tander
Rule 1 of Limited Companies - have an accountant involved, in order to keep it straight and narrow.
Response from 6 years, 5 months ago - Marlom Tander SHOW
6 years, 5 months ago - Arno Crous
Many thanks Marlom! I think I better do just that.
Response from 6 years, 5 months ago - Arno Crous SHOW
6 years, 5 months ago - Richard Anthony Dunford
If there's money going out then I guess it's still technically active. They'll expect you to fill out your annual return around a year from the date you registered. If you've not made a profit its pretty straight forward though and you obviously won't owe any corporation tax. There will be a fee of £13 as I remember for something else (can't think what it was off the top of my head).
Response from 6 years, 5 months ago - Richard Anthony Dunford SHOW
6 years, 5 months ago - Arno Crous
Many thanks Richard! That's very helpful and also reassuring.
Response from 6 years, 5 months ago - Arno Crous SHOW
6 years, 5 months ago - Paddy Robinson-Griffin
£13 is for Companies House. You have to deal both with CosHse and HMRC. Accountant is where it's at since you're now committed to company and personal tax returns. HMRC will probably write to you requesting a CT600 (expect one anyway). Don't forget your liability insurances. You'll want to run a separate bank account since the entity is a "body corporate" and needs to be untangled from your own finances.
I believe you'll be submitting a CT600 for ANY activity on the account, including spending money. Spending money isn't dormancy.
Why did you create a limited company vehicle for a short, btw? That strikes me as something you'll regret. Might not be too late to back out of this, talk to your *statutory* accountant asap (probably not the nice lady who does your personal return for £50 each year, but likely to cost you £500-1000 a year, more if you use them for VAT and/or payroll) and they may advise you about deregistering, it's not too expensive and certainly cheaper than running a company.
Response from 6 years, 5 months ago - Paddy Robinson-Griffin SHOW
6 years, 5 months ago - Arno Crous
Many thanks Paddy! That is very helpful. I created the company partly for the limited liability aspect and partly to use this as a learning experience (and from that point of view my strategy has certainly been successful so far). Having said that, the cost of an accountant is quite high compared to the size of the project so I will have to consider my options (including deregistering if it is still possible) carefully.
Response from 6 years, 5 months ago - Arno Crous SHOW