Dormant or UK non-resident

[bg9]

We need advice. The question is for a company incorporated in London. The company was created solely to be able to use the services on a payment platform TRANSFERWISE. Under this system, amounts in euro of approximately 20 thousand per month were received through a euro transfer from a Bulgarian company. The exact amount was immediately transferred to a Dutch company that supplies flowers to the Bulgarian company. The English company did not keep a dime and did not issue invoices. The flowers are delivered by a Dutch company in Bulgaria. The owner and director of the English company is a Bulgarian citizen and resident. The only connection of the English company to London is an official registered address in the office of the incorporation company. The company has no business in the United Kingdom, neither permanent establishment. So far, dormant company accounts have been filed with the Companies House. However, we received a notice to submit a Company tax return to the HMRC. In this situation, can we treat the company as dormant? Or, the company may be treated as UK non-resident for the purposes of UK domestic tax law. What should we do in this case?

[wamstax]

I do not follow how a company can be "Dormant" if it has material amounts of monies passing through it as clearly somebody acting in the capacity of the UK company must be carrying out activities with the transfer of monies. It would potentially be the case that the company could be non-UK tax resident but in that case it would probably have to be resident and making tax returns (and frankly taking a turn on the monies for its services) where the controlling officer/director (in the sense of who holds the company purse strings and makes top of the tree decisions).

You need to clear this up with HMRC as clearly the latter may become aware of substantial funds moving in and out of the UK - which in the absence of evidence to the contrary might be viewed as turnover (and even possibly profits).

[AGoodman]

The UK company is, by definition, UK tax resident.

It may just be possible that it is dormant if it is acting purely as a nominee for the Bulgarian company but you would likely need some evidence of that.

There is also VAT to consider - which I (thankfully) know nothing about. VAT may not ignore nominees, not least because the Dutch company has presumably issued VAT invoices to UKCo.

Get some proper advice urgently - particularly on the VAT