When to tell HMRC your company is trading

A company can exist before it starts carrying on business. The date of incorporation and the date it becomes active for Corporation Tax are therefore not always the same. Record the actual activity rather than assuming the first customer payment is the only relevant event.

Identify what the company has started doing

HMRC guidance distinguishes trading, non-trading activity and dormancy. Buying or selling, advertising, renting premises and employing someone can be relevant to the start of business activity. Preparatory steps and particular income sources need to be considered on their facts. ^[1][2]

Create a short chronology: incorporation, first expenditure, launch advertising, contracts, first sale and any investment income. The chronology helps an accountant assess the position without guessing from a bank balance.

Notify HMRC at the appropriate time

HMRC states that an active limited company within the charge to Corporation Tax must notify it within three months of the start of its tax accounting period. Adding the relevant Corporation Tax service to the business tax account is part of arranging online access; check that the substantive notification requirements are also satisfied. ^[1][2]

Do not assume that registering at Companies House or receiving a Unique Taxpayer Reference proves every HMRC action is complete. Retain the acknowledgement of the step actually taken.

Prepare the company information

• Company name and registration number.
• Company Unique Taxpayer Reference, when available.
• Registered office and principal business contact details.
• The activity start date and evidence supporting it.
• The intended accounting year end and adviser details.

Use the company's tax access arrangements rather than a founder's unrelated personal account. If an accountant will act, agree agent authorisation and who remains responsible for monitoring correspondence.

Keep dormant and active periods distinct

A company formed to reserve a name may remain inactive for a period. If it then begins trading, update its tax position and records. Equally, a company with no sales should not be called dormant without checking its other activities and income. ^[1]

Example: launch before the first sale

Suppose a company starts advertising and enters a premises contract before receiving its first customer payment. Waiting for cash to arrive could overlook earlier relevant activity. Keep the evidence and ask the accountant to determine the correct period rather than choosing a convenient date.

Separate preparation from the start of business

Writing a business plan or exploring whether to launch does not necessarily mean the company has started trading. HMRC's detailed guidance recognises preliminary work and expenditure before business activity begins. The task is to identify what actually happened, rather than treating every cost as conclusive or assuming that only a sale can count. ^[1]

Use a chronology with an event, date, document and explanation. For a proposed catering company, entries could include market research, a kitchen agreement, advertising, accepting the first booking and delivering the first event. The dates may be different. Give the accountant the agreements and invoices needed to assess the sequence instead of selecting the last date simply because it is easiest to remember.

If the company also receives interest or other income, include it. A company with no customer sales may still need its Corporation Tax position considered. The evidence should cover all relevant activity, not only the trading line described on the website.

Confirm what the formation process has already done

Retrieve the formation acknowledgement and any HMRC correspondence. Identify whether Corporation Tax registration was included in the incorporation process and whether a start date was supplied. Then check what remains necessary to establish the correct position and online access. This avoids both assuming everything was completed and sending inconsistent information through a second route.

Keep separate notes for registration, access to the business tax account and agent authorisation. They answer different questions. An accountant may be engaged to prepare the accounts but still need the appropriate authorisation to deal with HMRC. A director should know which step is outstanding and who will complete it.

Deal with uncertain or late information

If the trading date is uncertain, provide the chronology promptly and identify the specific uncertainty. For example, a signed contract might depend on a condition that was satisfied later. Do not ask an adviser to confirm an invented date unsupported by the documents. Retain the reasoning used to establish the reported period.

If notification may be late, collect the correct information and seek help with the correction. Record when the issue was discovered and what was done. Waiting for the first annual accounts can allow an unresolved registration problem to continue far beyond the point at which it was identified.

Turn the decision into the accounting calendar

Once the activity start and relevant tax period are established, give the dates to the bookkeeper and the person maintaining the compliance diary. Ask the accountant to distinguish the tax periods from the first Companies House accounts period. Save the acknowledgement and note any follow-up requested by HMRC.

The practical result should be an evidenced start date, consistent records and a clear schedule for the next obligations. Receiving a reference number is useful, but it is not the final check that the company's dates and responsibilities have been understood.

If the notification may already be late, establish the facts promptly and ask how to correct the position. Do not invent a later start date to make the paperwork appear timely.

For help organising the company dates and responsibilities, start with new company compliance planning.