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HMRC internal manual

Debt Management and Banking Manual

Corporation tax: Recovery of debts from dormant companies

Dormant cases

Definition of dormancyA company is dormant when it

  • does not receive any profits or income
  • holds no assets capable of producing any profits or income or
  • has assets that are unlikely to produce profits and income in the near future.Further details can be found in the COTAX Manual.

Recovery actionIf you are aware that a company is dormant and debts remain outstanding from the pre- dormancy period, then

  • complete a pre-enforcement check to establish whether there are any assets
  • ensure a dormancy date is present, and
  • contact any directors for payment.If payment is not received and assets are held then take the appropriate enforcement action (as the company is not trading, summary proceedings cannot be taken).

(This content has been withheld because of exemptions in the Freedom of Information Act 2000)

Company becomes dormant during recovery actionIf you are made aware that a company is dormant whilst you are pursuing a debt

  • obtain the date of dormancy and
  • request that an officer of the company provides a signed confirmation that the company did not trade in the period relating to the debt.

Debt arises after dormancyIf the debt has arisen after the date it was made dormant

  • check that the record correctly reflects the status of the company and
  • ask the assessing / compliance office to confirm whether the debt should be pursued (see COM-Companies Outside the Charge to CT).If the record does not show that the company is dormant then

  • send the details (and the signed confirmation where obtained) to the assessing / compliance office and where necessary,
  • ask them to correct the record.