A dormant company is a company that has had no significant accounting transactions since incorporation or during the accounting period.
In this article:
In simple terms, a dormant company is classed as dormant if it:
- has stopped trading (selling/buying of goods, services, renting property, investing, etc)
- is a new limited company that has not traded at all
- is a flat management company
Here are some examples of typical dormant companies:
- a shelf company - companies that are already incorporated
- a new company that's not yet traded
- a company that will never trade such as land or intellectual property
- an existing company that has been - but is not currently trading
- a company that's no longer trading and is going to be removed from the Companies House register
If your company has stopped trading
If you want to change your company status from active to dormant, you must first stop trading. This means you should not carry out any business activity, i.e trading or receiving income. Your company still has annual requirements that you must follow. You will also need to contact HMRC to let them know your company's dormant.
If you’re registered for VAT
You must deregister for VAT within 30 days of your company becoming dormant. If you plan to restart trading, you must send ‘nil’ (empty) VAT returns while your company is dormant.
If you employ people
If you don’t plan to restart trading in this tax year, you should close your PAYE scheme.
Restarting a non-trading or dormant company
Within 12 months of restarting a dormant or non-trading company, you will need to:
- Tell HMRC within 3 months by registering for Corporation Tax again
- Send accounts to Companies House within 9 months of your accounting reference date (ARD)
- Pay any Corporation Tax due within 9 months and 1 day of your company’s year end.
- Send a Company Tax Return - including full statutory accounts - to HMRC within 12 months of your company’s year end.
Dormant company legal responsibilities
Regardless of whether your company is dormant (not trading), you still have annual requirements that your company must complete as you would do for a fully trading company. You don't have to pay Corporation Tax or send a Tax Return if you're dormant.
Your annual dormant company requirements are filing:
- Confirmation Statement - You will need to choose the dormant sic code (99999)
- Dormant company accounts - The accounts will be marked as 'nil'
- A special bundle of both of these services can be purchased from any of the above links
Companies House will send reminder letters to the registered office address when your accounts and confirmation statement is due. If you're signed up to our eReminder service, we will also send you email notifications.
Please note avoiding filing these can result in penalty fines or dissolution of your company.
Set up a dormant company
- Form the company as you normally would *
- Roughly 3 weeks after incorporation, HMRC will send a letter to your registered office. The letter will contain contact information for HMRC. Use the letter to explain your company is dormant and shall remain dormant until further notice
- File your confirmation statement when they are due
- File your dormant company accounts when they are due
- Don't trade!
* Alternatively, If you do not want to pay an accountant to file all the necessary requirements, or you just do not want the hassle, then you may be interested in our Reserve a Company Name service.
With this service, we will register your company name and take care of the all mandatory requirements as a dormant company, so you don't have to. When you're ready to start trading, we will transfer the company and all responsibilities to yourself.
This article is an overview and so should you require professional advice, please speak with an accountant or business advisor.