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When do I have to tell HMRC my company is active?

Within 3 months of becoming active.

The 3 months usually start when your company starts doing business or gets income, such as bank interest, not when it was set up. If HMRC has not asked for a tax return, you must also tell it the company is liable to tax, within 12 months of the period end.

Published

At a glance

Deadline
3 months after that day
How
Add Corporation Tax to your company's
If you miss that
A penalty of up to 30% of the tax still unpaid, if you did not mean to miss it

Sources

This entry is general information for directors of UK private limited companies, not advice about a particular company.

Does this apply to me?

  • Your company has been set up, but has not started doing business and has no income. Not yet. It is usually for Corporation Tax, and the 3 months have not started.

  • Your company has started doing business. Yes: tell HMRC within 3 months of the day its first began.

  • Your company's only income is bank interest. Yes: earning interest makes a company active for Corporation Tax.

  • Your company was dormant and is starting again. Yes, this applies. See "Starting again after a dormant spell" below.

Sources

What to do

  1. Note the day your company becomes active. That is usually the day it starts doing , such as buying, selling, advertising, renting a property or employing someone. It is earlier if it first earns income, such as bank interest.

  2. Get your company's tax reference. This is its 10-digit (UTR). It is on any letter from HMRC. If it has not arrived 15 working days after you registered your company, you can ask for it online.

  3. Add Corporation Tax services to your business tax account. You need your company's registration number, the date it started doing business, the date its are made up to, and the UTR.

  4. Do this within 3 months of your first accounting period beginning.

  5. Check the dates HMRC sends you. HMRC writes with the dates of your first . Tell HMRC if you think they are wrong.

Sources

How it works

The 3 months start when your first accounting period begins

The law says your company must tell HMRC when its first begins. It must do this in writing, within 3 months, and say when the period began. An accounting period is the time your company's covers.

Why not the day you the company? Because the first accounting period only begins when your company comes into the Corporation Tax system. HMRC says this most often happens when a company becomes or gets a source of income. For a UK company not already in the system, starting to do business also brings it in.

If your company has no income before it starts , its first accounting period starts on the date it started to do .

For example

Say Bramley Studio Ltd starts doing business on the day it is set up, 11 March 2024.

Its first accounting period begins that day.

Priya, the director, must tell HMRC by 11 June 2024.

If instead

Say instead it does no business, and has no income, until 1 September 2024. Then the deadline is 1 December 2024.

The notice must be given no later than 3 months after the period begins. To be safe, tell HMRC before the same date 3 months on, and earlier if that date is a weekend.

Sources

The detail The exact rule

Finance Act 2004, section 55(1): a company must give notice to HMRC of the beginning of its first accounting period, and of the beginning of any later accounting period that does not immediately follow the end of a previous one. Section 55(2): the notice must be in writing, must state when the accounting period began, must contain any other prescribed information, may be given to any officer, and must be given not later than three months after the beginning of the accounting period. Section 55(5): "company" means a body corporate. Interpretation Act 1978, section 5 and Schedule 1: in any Act, unless the contrary intention appears, "month" means calendar month.

Corporation Tax Act 2009, section 9(1) and (2): an accounting period begins when the company to corporation tax, or immediately after the end of the previous one if it is still within the charge. A UK resident company is treated as coming within the charge when it starts to carry on business, if it would not otherwise be within the charge. Section 9(3): if a or allowable loss accrues outside an accounting period, an accounting period begins at that time. HMRC's manual (CTM01410) says the most common circumstances when a company first comes within the charge are when it becomes UK resident or acquires a source of income.

HMRC's COTAX manual (COM1040): for newly incorporated companies, HMRC issues form CT41G the day after the record is set up. The form tells them of their obligations under section 55. GOV.UK says the best way to give notice is HMRC's online registration service.

Sources

What counts as active

"Active" is wider than selling things. GOV.UK says a company is generally active for Corporation Tax when it is, for example:

  • carrying on a trade or profession

  • buying and selling goods to make a profit

  • providing services

  • earning interest

  • managing investments

  • receiving any other income

Getting ready does not count. HMRC says a new company can do things to set up a business, and spend money on it, before it has started trading. Examples are writing a business plan or negotiating contracts.

Being active for Corporation Tax may not mean the same as it does for VAT or for Companies House.

For example

Say Priya sets up a company and spends 2 months writing a business plan.

The company has no bank interest or other income yet.

It is not yet active, so the 3 months have not started.

If instead

The company's bank account starts earning interest. It is then active.

Sources

A second deadline if HMRC has not asked for a return

HMRC can send your company a notice asking for a Corporation Tax return. Its letters call this a "". If your company is liable to Corporation Tax for a period and has had no such notice, you must tell HMRC. You have 12 months from the end of that accounting period.

This is the notice the law's penalty for failing to notify is tied to. See "If you get it wrong" below.

Once your company has a notice to deliver a return, this second duty does not apply. But you must file the return, even if your company made a loss or owes no tax.

For example

Say Bramley started doing business on 11 March 2024, and owes tax for its first accounts, which run to 31 December 2024.

Its first accounting period ends on 31 December 2024.

If HMRC sends no notice to deliver a return, Priya must tell HMRC by 31 December 2025.

Sources

The detail The exact rule

Finance Act 1998, Schedule 18, paragraph 2(1): a company that is chargeable to tax for an accounting period and has not received a notice requiring a company tax return must give notice to HMRC that it is so chargeable. Paragraph 2(2): the notice must be given within twelve months from the end of the accounting period.

Paragraph 2(1A): a company need not give notice for an accounting period in which all the income on which it is chargeable consists of payments on which it bears income tax by , it has no chargeable gains, and, after deducting that income tax, the tax payable for the period is nil. Paragraph 3: an officer may by notice require a company to a company tax return.

Sources

Starting again after a dormant spell

You also have to tell HMRC when a new accounting period begins after a gap.

That works like this. Your company's accounting period ends when it stops trading, or stops being within the Corporation Tax system. When it starts doing business again, a new period begins. It does not follow straight on from the last one, so it needs a new notice within 3 months.

Once you have told HMRC your company is , you file no more returns. That changes if HMRC asks for one or you start trading again.

Sources

Consequences

If you get it wrong

The law's penalty for failing to tell HMRC is tied to the 12-month notice. The 3-month notice used to be on an older penalty list. It was taken off that list from 1 April 2010.

The penalty is a share of the tax that is still unpaid 12 months after the period ends, because you did not tell HMRC. How big a share depends on why you missed it:

  • Why

    You did not mean to

    Most it can be
    30%

  • Why

    You meant to, but did not hide it

    Most it can be
    70%

  • Why

    You meant to, and hid it

    Most it can be
    100%

Sources

HMRC must cut the penalty if you tell it about the failure, help it work out the tax and let it see your records. The penalty can fall to nothing if all of these apply:

  • you did not mean to miss the

  • you told HMRC before you had reason to think it had found out

  • HMRC learned of it within 12 months of the tax first being unpaid

There is no penalty if you did not mean to miss it and have that HMRC, or , accepts.

For example

Say Bramley got no notice to deliver a return, and Priya did not tell HMRC.

Say £1,000 of tax is unpaid 12 months after the period ends. She did not mean to miss it.

Most the penalty can be
£1,000 × 30%
£300

If she tells HMRC first, and in time, it can fall to £0.

If HMRC sends your company a , it must file. HMRC says a that has not told HMRC must still file, or it may face penalties.

Sources

The detail The exact rule

Finance Act 2004, section 55(6) added section 55 to the penalty table in the Taxes Management Act 1970, section 98. Finance Act 2008, Schedule 41, paragraph 25 omitted that entry. Paragraph 25 came into force on 1 April 2010, with effect as set by article 3 of SI 2009/511, which is not quoted here.

Schedule 41, paragraph 1: a penalty is payable where a person fails to comply with an obligation in the Table. For corporation tax, the Table lists the obligation under Finance Act 1998, Schedule 18, paragraph 2 (notice of chargeability). Finance Act 2026 omitted the diverted profits tax entry from the Table for beginning on or after 1 January 2026, and did not change the corporation tax entry.

Paragraph 6: for a failure in category 1 (a domestic matter), the penalty is 100% of the for a failure, 70% for a deliberate but not concealed failure, and 30% for any other failure. Paragraph 7(3): for corporation tax, the potential lost revenue is the tax for the accounting period that, because of the failure, is unpaid 12 months after the end of the period.

Paragraphs 12 and 13: HMRC must reduce the penalty for a disclosure, which means telling HMRC, helping it work out the tax and giving access to records. For a 30% penalty, the minimum is 0% for an unprompted disclosure where HMRC become aware of the failure less than 12 months after the tax first becomes unpaid, and 10% otherwise. For a prompted disclosure, the minimums are 10% and 20%. Paragraph 20: no penalty arises for a failure that is not deliberate if the company satisfies HMRC or the tribunal that it has a reasonable excuse. Not having enough money is not a reasonable excuse unless it comes from events outside the company's . Relying on someone else is not one unless the company took reasonable care.

Sources

Less common situations

Your accounts cover more than 12 months. You file 2 returns, because an cannot be longer than 12 months. The second period starts straight after the first, so you do not need a new 3-month notice for it.

You had a good reason for missing the 3 months. The law treats your company as having complied until the reason ends. After that, you must tell HMRC without unreasonable delay.

Sources

Worked example: Bramley Studio Ltd

Bramley Studio Ltd was on 11 March 2024. On 20 May 2024 it changed its to 31 December, so its first accounts run from 11 March to 31 December 2024.

Say it is and has no income at all, not even bank interest, before it starts doing . Say HMRC sends it no notice to deliver a return, and it owes tax for its first period.

Example 1: starts doing business the day it is set up

  • Starts doing business

    Date
    Monday 11 March 2024

    Say it starts the day it is set up. Its first accounting period begins that day

  • Tell HMRC by

    Date
    Tuesday 11 June 2024

    3 calendar months later. Our working: counted to the same day number

  • First accounting period ends

    Date
    31 December 2024

    Its accounts date comes before 12 months from the start

  • 12-month notice due

    Date
    Wednesday 31 December 2025

    Only because HMRC sent no notice to deliver a return

Sources

Example 2: dormant at first, starts on 1 September 2024

  • Set up

    Date
    11 March 2024

    Say it does no business and has no income until 1 September. No accounting period begins yet

  • Starts doing business

    Date
    Sunday 1 September 2024

    Its first accounting period begins that day

  • Tell HMRC by

    Date
    Sunday 1 December 2024

    3 months later. It is a Sunday, so to be safe, tell HMRC by Friday 29 November

  • First accounting period ends

    Date
    31 December 2024

    Its accounts date comes first

  • 12-month notice due

    Date
    Wednesday 31 December 2025

    Only because HMRC sent no notice to deliver a return

Sources

Not covered here

When your ends, when your return is due, and how to tell HMRC your company is . See your Corporation Tax accounting period, dormant for Corporation Tax or Companies House and when your CT600 is due.

Where this comes from

61 official sources. Open a group to see them.

The law 23 sources
HMRC 16 sources
GOV.UK 18 sources
Companies House 4 sources

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