Your limited company's first accounts and Company Tax Return
You started trading after your company set up
Limited companies can be ‘dormant’ for Corporation Tax between setting up (‘incorporating’) and starting to trade for the first time.
HM Revenue and Customs (HMRC) has detailed guidance on what counts as dormant for Corporation Tax.
You tell HMRC the date that you started to trade when you add Corporation Tax services to your business tax account.
What you have to do if your company was dormant depends on whether you added Corporation Tax services to your business tax account before your accounting reference date.
You added Corporation Tax services to your business tax account before your accounting reference date
You usually:
- do not file a tax return for the period you were dormant
- prepare your first tax return to cover the period you were trading
File 2 tax returns if you were trading for more than 12 months - one for the first 12 months of trading and one for the rest of the time.
Example
| Action | Date |
|---|---|
| Company set up | 11 May 2013 |
| Started trading | 22 July 2013 |
| Added Corporation Tax services to your business tax account | 26 August 2013 |
| Accounting reference date | 31 May 2014 |
Prepare accounts for 11 May 2013 to 31 May 2014. Then file one tax return for your trading period from 22 July 2013 to 31 May 2014.
After you do this, your dates for accounts and tax returns will normally match your company’s financial year from 1 June to 31 May every year.
Check the ‘notice to deliver a Company Tax Return’ you get after your first year. If it covers your dormant and trading periods you must file 2 tax returns - one for your trading period and one for your dormant period.
You did not add Corporation Tax services to your business tax account before your accounting reference date
You must file 2 tax returns - one for the period you were dormant and one for the period you were trading.
Example:
| Action | Date |
|---|---|
| Company set up | 11 May 2013 |
| Started trading | 22 July 2013 |
| Accounting reference date | 31 May 2014 |
Prepare one set of accounts for 11 May 2013 to 31 May 2014. Then file your:
- first tax return for your dormant period from 11 May to 21 July 2013
- second tax return for your trading period from 22 July 2013 to 31 May 2014
After you do this, your dates for accounts and tax returns will normally match your company’s financial year from 1 June to 31 May every year.