One of your new clients has a company used to run a failed side project. They want to close this down with as little fuss as possible. You find that up to date accounts have not been prepared. Do you need to report the loss-making endeavour?

Formal requirement

As a rule, HMRC expects companies to submit a corporation tax (CT) return plus accounts prepared in accordance with the Companies Act 2006 , for all periods in which they are active, and it issues a notice to deliver a company return. Usually if the return is not submitted by the filing deadline, twelve months from the end of the CT period, a fine of £100 applies. Further fines at a higher level apply the longer the return is overdue, even if there’s little or nothing to declare.

However, for practical reasons HMRC will forego the requirement to submit a return in cases where the company is going to be wound up using a members’ voluntary liquidation (MVL), or an informal striking off.

Pro advice. The situation is different if the company is being wound up due to insolvency proceedings or under a creditors’ arrangement. If this applies to your client, refer to HMRC’s guidance (see Follow up ).


Naturally, a company can only be wound up using an MVL or the strike-off procedure after it’s finished trading. For the latter the company must have ceased trading for at least three months. Even if it has significant assets HMRC will consider foregoing CT returns and Companies Act accounts as long as it’s happy that there’s no tax at risk.

Example. Acom Ltd ceases trading in June 2020. Its normal accounting date is 31 December. Its directors ask HMRC in July 2020 if it can be struck off on 31 October 2020. Acom’s CT return for its last normal accounting period to 31 December 2019 isn’t due until 31 December 2020. At this point HMRC will not have issued a CT603 requesting a CT return for the period 1 January to 31 October 2020.

HMRC will accept informal accounts, e.g. management accounts and forego tax returns for the year to 31 December 2019 and the period up to the date Acom became inactive as long as it believes no tax will be lost as a result. What would happen if Acom doesn’t ask HMRC to agree to the strike-off until after 31 December 2020, i.e. after the filing deadline?

If the CT return hasn’t been submitted for the year ended 31 December 2019 a penalty will apply and HMRC will insist on formal accounts and a CT return for that period. It will, however, accept informal accounts for the period 1 January 2020 to the date Acom became inactive.


As the side project company is loss making, there is clearly no tax at risk and so you should request that HMRC forgoes the formal accounts and return. You will have solved a niggling problem, and freed up your time to focus on added value work for your new client.

Pro advice. Given that the new client seems to have more than one business interest, this would be a good place to start. Have they optimised their profit extraction? Have they split the business interests efficiently? Depending on their age, you could also look at their exit strategy to ensure entrepreneurs’ relief or business property relief have been factored in as appropriate.

If you ask HMRC before the deadline for submission of a corporation tax return, it will usually forego it and accept informal accounts, e.g. management accounts, to determine the tax position. This can help speed up the process of striking off a company leaving you free to look at added value work, such as exit strategy planning.

The next step

HMRC guidance on returns when winding up a company.

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