The meaning of ‘active company’ status at Companies House

Updated on February 8, 2022

Companies House and HMRC have different ideas on what constitutes an active business. In the process of running a limited business, you’ll come across this term in numerous regulatory advice, so it’s important to understand these distinct definitions.

Active at Companies House

Companies House establishes a new company as a separate legal entity, allowing it to begin doing business immediately.

A UTR (Unique Tax Reference) is a number that the Internal Revenue Service gives to each business.
In the long run, reactivating dormant business accounts can save you both money and time.
Dormant corporations are considered inactive for the purpose of filing annual financial reports with Firms House.

Limited Companies categorises businesses into “active” and “dormant” based on whether or not they are currently in operation.

Active at HMRC

In order for HMRC to classify a company as “active,” it must both be registered with Companies House and be actively conducting business or earning money. To qualify for Corporation Tax reasons, a firm must meet the following requirements:

To pay corporation tax, you must register with HMRC.
provide HMRC with annual Company Tax Returns and full statutory accounts, and pay annual Corporation Tax on all taxable income they obtain.

Active company requirements for Companies House

Annual Confirmation Statements (previously known as “annualized returns”) and annual accounts must be submitted to Companies House even if the company isn’t trading (i.e. dormant)

The Confirmation Statement is used to verify company registration information (formerly known as the Companies House form CS01). This mechanism is used by Companies House to keep the populace record current. The following, if applicable, is included in the statement:

name and location of a legal business entity
The phone number and email address of SAIL (Single Alternative Inspection Location)
This file provides information on the board of directors and the company secretary’s stockholders’ (or guarantors’) data.
People with a Large Level of Influence (sic) and the SIC code for equity capital (s) are both registered (PSCs)

Companies must publish annual accounts with Companies House every year in order to report on their financial activity for the previous financial year.

While micro-enterprises and small businesses are exempt from preparing comprehensive statutory financial statements, all other limited liability firms are required to do so if they conduct business.

For firms that are inactive (dormant/not trading) for Corporation Tax purposes and dormant with Companies House, they are required to file dormant accounts.

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Active company requirements for HMRC

Any time a business engages in any of the following taxable activities, it must register with HMRC online for Corporation Tax purposes within three months.

acquiring or promoting products
service merchandising
Investing administration
issuing or receiving dividends from company stock for the purpose of paying employees and running the business (including director salaries).
Making interest payments, spending money, or receiving money through a business bank account are all examples of commercial activity.
In order to file a Company Tax Return and annual accounts with HMRC, a company must first register with the government. VAT registration may also be required or desired.

You must notify HMRC’s Corporation Tax office as soon as possible if your company is no longer trading and is no longer eligible for Corporation Tax. You will not be required to file tax returns or accounts with HMRC until your firm is registered for Corporation Tax.