Dormancy and company assets

[Rafd]

A quick question if anyone can help.. If a company goes dormant then at a later date decides to close, how is disposal of company assets at that point dealt with for tax purposes?

Thanks

[ladymuck]

It follows the standard company closure process. Dormancy is just a declaration that the company is not active so no-one expects accounts, etc from you (other than an annual confirmation statement).

[Rafd]

Ok thanks, I was wondering how the sale of the assets worked wrt the dormancy but it seems you need to produce accounts at the point that the company is closed anyway.

[northernladuk]

Are you sure you really mean dormant and not just unused?

Out of the 100 times people mention dormancy here 99 have it wrong.

[Chart Accountancy]

It will ordinarily depend on the use of the assets whilst the company is dormant. If for example the company has purchased a computer shortly before it ceased to trade, where a relief was claimed for Corporation Tax and VAT, the assets will have a value if these were to be sold. Therefore, if the computer is made available to the director for personal use, then it needs to be considered if a disposal should be accounted for in the final trading accounts i.e to transfer the ownership of the asset to the director. Otherwise, if the business assets are made available for personal use whilst the company is dormant and not using the equipment, there will be potential benefit in kind tax charge arising. If the assets are fully depreciated, then they can be written off if not in use in the business. If the assets have a market value, then a disposal needs to recognised for any profit on the disposal to be included in the final trading set of accounts.