My friend Andrew is a self employed HGV driver. During the covid pandemic he was not working and hence made no income returns to HMRC. He had registered his company with the VAT. How many days does he have to deregister VAT ?

If you do not intend to trade again you must deregister for VAT within 30 days of your company becoming dormant.

Dormant companies and associations

Overview

Your company or association may be ‘dormant’ if it’s not doing business (‘trading’) and doesn’t have any other income, for example investments.

Dormant means different things for:

Corporation Tax and Company Tax Returns

annual accounts and returns for Companies House if you have a limited company

Dormant for Corporation Tax

Your company is usually dormant for Corporation Tax if it:

has stopped trading and has no other income, for example investments

is a new limited company that hasn’t started trading

is an unincorporated association or club owing less than £100 Corporation Tax

is a flat management company

Trading includes buying, selling, renting property, advertising, employing someone or getting interest. HMRC has detailed guidance on what counts as dormant for Corporation Tax.

When HMRC thinks your company is dormant

You may get a letter from HMRC telling you:

they’ve decided to treat your company or association as dormant

that you don’t have to pay Corporation Tax or file Company Tax Returns

When you think your company is dormant

If your company has stopped trading and has no other income, you can tell HMRC that it’s dormant for Corporation Tax.

If you’ve never had a ‘notice to deliver a Company Tax Return’

You can tell HMRC your company’s dormant over the phone or by post.

If you’ve filed a Company Tax Return or had a ‘notice to deliver a Company Tax Return’

You’ll still need to file a Company Tax Return online - this will show HMRC that your company is dormant for this period.

Limited companies

You don’t need to pay Corporation Tax or file another Company Tax Return once you’ve told HMRC your company is dormant unless you receive a further notice to deliver a Company Tax Return.

You must still file annual accounts and a confirmation statement (previously annual return) - exactly what you must do depends on if you’re dormant for Companies House.

Find out how to restart your company.

If you’re registered for VAT

However, if you plan to restart trading, you must send ‘nil’ (empty) VAT returns while your company is dormant.

If you employ people

If you do not plan to restart trading in this tax year, you should close your PAYE scheme.

Dormant for Companies House

You must file your confirmation statement (previously annual return) and annual accounts with Companies House even if your limited company is:

dormant for Corporation Tax

dormant according to Companies House

But if your company is dormant according to Companies House and also qualifies as ‘small’ you:

can file ‘dormant accounts’ instead

don’t have to include an auditor’s report with your accounts

Check what to include in your accounts if your company is small and dormant for Companies House.

Dormant according to Companies House

Your company is called dormant by Companies House if it’s had no ‘significant’ transactions in the financial year.

Significant transactions don’t include:

filing fees paid to Companies House

penalties for late filing of accounts

money paid for shares when the company was incorporated

You do not need to tell Companies House if you restart trading. The next set of non-dormant accounts that you file will show that your company is no longer dormant.