What is the Meaning of 'Active Company' Status at Companies House
The Companies House is the UK government body that incorporates or dissolves companies.
When you search for your company after incorporation, your company can be active, dormant, active: proposal to strike off, or liquidation.
These four terms define the status of a company and it may differ between Companies House and HMRC. The term ACTIVE means your company is operational, and you'll find it in different statutory copies.
For this reason, it's worth it to understand what an active company means in various scenarios.
How do I know if my company's status is ACTIVE or otherwise? A simple search on the Companies House register will tell you the status of your company.
Under the Companies House register, search for the field 'Company status', and the company's status information will be displayed. However, if this information is new and you want to learn more, you're on the right bus. Hence, it would help if you read on to know what it is and why an active company status shouldn't concern you.
The Meaning of Companies House Company Status'
After incorporation at Companies House, the company exists as a legal entity separate from the owner(s).
When you want to ascertain this status, you can look it up on the Companies House web search tool on the main page. Once you locate 'company status', one of the following terms will describe your company's status.
- Active – A company is incorporated, and it exists on the company register
- Active: Proposal to Strike off – The company is about to shut down
- Dissolved – The company is already shut down.
- Liquidation – The company's assets are on sale, and the business is closing.
Requirements for 'Active' at Companies House
You don't have to inform Companies House about your company's active status for Corporation Tax.
However, you notify them after filing your annual accounts within nine or 21 months after your first company's accounting Reference Date (ARD).
The ARD date marks the end of a company's financial year; it falls on the anniversary of the last day of the month of incorporation.
Companies that must be operational (Dormant) must prepare dormant accounts for Companies House. The Dormant accounts help Companies House to know if the company still needs to be operational or has stopped trading.
Companies House requires dormant and active companies to submit an annual report about the company's information. It could be a confirmation of the internal structure of a company or an update which can include:
- The company name
- Registered office address
- Standard Industrial Classification (SIC) codes
- Shares Capital
- Details of shareholders, directors, and People with Significant Control (PSCs)
The confirmation statement is to be filed 14 days after the anniversary of a company's formation or the anniversary of the previous confirmation report. You must submit this report annually whether the company is trading or dormant.
Active at HMRC
HMRC classifies a company incorporated by Companies House, is in trading, and receives income as 'active'.
A company with these characteristics is active for Corporation Tax purposes, meaning the business must:
- Register for Corporation Tax with HMRC
- Deliver an annual Company Tax Return and full statutory accounts to HMRC
- Pay Corporation Tax yearly on all taxable income received
Requirements for Active at HMRC
A company must register with HMRC online within three months of being active for Corporation Tax. The following activities are deemed as taxable:
- Buying or selling of goods or services
- Management of investments
- Issuing or receiving dividends from shares
- Employing staff and operating payroll, including paying a director's salary
- Leasing or buying assets or land
- Accruing interest
- Receiving or spending money through a business bank account
After incorporation and registration for Corporation Tax, HMRC sets payment deadlines for Corporation Tax, filing a Company Tax Return, and annual accounts.
Contact HMRC's Corporation Tax office early enough for a dormant company to report INACTIVITY. There's only a need to file tax returns or accounts for HMRC when the company is active for Corporation Tax.
About Dormant Companies
Companies House classifies a company as DORMANT if it has yet to have a significant transaction in a financial year.
Companies House requires business owners to file for a confirmation statement and annual accounts, including dormant companies. Significant transactions are:
- Fines for late filing of accounts
- Filing fees remitted to Companies House
- Money paid for shares after incorporation
Once HMRC deems a company dormant, they send a letter stating they have decided to treat the business as dormant.
Dormant companies don't have to pay corporation tax or file company tax returns. But why can a company be dormant? A company can be dormant to reserve a company name or reorganise a previously active business.
There's no limited time for a company to remain dormant. However, the business owner must inform the local corporation tax office soon.
NOTE: A non-trading and dormant companies are different, and you should distinguish one from the other. All dormant companies can be non-trading but not all non-trading companies are dormant.
- Non-trading - the company doesn't do business, but other accounting transactions are recorded in the accounts books.
- Dormant - No accounting transactions.
The Companies House Search Tool
Whenever you want to update or find a company's information, the advanced Companies House search function is the solution. You can read this article to understand how to use Companies House services.
The Companies House web service has a feature for users to search for information about a company.
The register is user-friendly, helping individuals and businesses to access the information they seek. It was introduced in 2021, and it allows users to search for company information in specific criteria that include:
- Company name
- Registration number
- Location
- Date of incorporation
- Status
- Registered office address
- Company Type
- Company subtype
- Nature of business
Users can filter search results depending on factors like the company's status. The information you get about a company from every search is detailed to include confirmation statements, accounts and other documents.
Steps to Check a Company's Status
Checking the status of your limited company is essential as you get to know if it has sound legal standing and financial health. Here are the steps to follow:
- Open the Companies House web service from your search engine
- Locate the dialog box
- Enter the company's name and click on the search tool
- Review company information according to your search
- After the search is complete, here are the results for your search;
- Name of the company
- Company Registration Number (CRN)
- Company status - Active, dissolved, struck off
- Date of incorporation
- Registered office
- Check financial reports (where necessary)
- Verify compliance with legal requirements
Reasons for Checking a Company Status
You should check a company's status or other details regardless of who you are, an investor, business owner, customer, or supplier. A company check will allow you to access this information:
- Company authenticity
- Analyse a company's financial status before offering services, investing, taking over the business, or lending
- Due diligence about a company before accepting a job offer
- Determine how long a company has been operational
- Verify the owners who control or manage the business
- Check whether a company is up to date with its records and accounts
- Establish if the registered office exists
- Know how the business is performing
- Find out if a company is managed correctly
Frequently Asked Questions
What does active mean by a company's status?
An active company status means it has been formed but has yet to be dissolved and has no connection to the business's trading.
How can I differentiate between an active company and a dormant company?
As a dormant company, you can't actively trade or carry out activities to drive profit – which also translates to undertaking significant transactions. Registering a company as dormant is to close down most business and financial activities.
Can a non-trading company status be active?
The status of a company has no relation to trading, but its business life is open or closed.
The Bottom Line
A limited company is 'active' immediately after incorporation at Companies House. The active status in a company means it exists legally and can trade as per Companies House. However, an active company is defined differently by HMRC regarding Corporation Tax objectives. HMRC only considers a company as 'active' once it begins showing trading activities like buying and selling goods or services. Getting an income also qualifies a company's status as active and taxable.