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Making Your Company Dormant

You may have heard of, or seen some companies being marked as dormant by Companies House. Dormant Companies are companies that are registered, but not used. This may be for several reasons, but can include:

  • Registering a name ready for trading but not yet ready to use it.
  • To hold a fixed asset such as property. With a housing development, for example, a management company would be responsible for income and expenditure, but a dormant company can own a property or land.
  • Using it to protect your sole trader trading name. While you're a sole trader, there's nothing stopping anyone registering your trading name as a limited company. By registering it yourself as dormant, you're simply protecting your name.

According to Companies House, a dormant company is classed as a business without 'significant' transactions in the financial year that you'd normally report.

Significant transactions don't include:

  • filing fees paid to Companies House
  • penalties for late filing of accounts
  • money paid for shares when the company was incorporated

I need to register a dormant company, where do I start?

There's no special process to register a dormant company. In fact, it's the same as any other limited company. As long as the above conditions are met, it will be regarded as dormant.

Do I need to tell Companies House that my company is dormant?

There's no need to inform them when you incorporate a new dormant company. However, it is recommended to inform HMRC for the purpose of corporation tax.

From year 2, you will need to complete your annual return as you normally would with any company (although this will be replaced shortly by the Confirmation Statement). As part of this report, you will need to specify your Standard Industry Classification Code (or SIC code). This is used to indicate what your business does. At the same time, you can also submit the code of 99999 which is for a dormant company.

You will also need to submit your first set of Annual Accounts. Unless you have started trading, you will only need to submit the Dormant Company Accounts, which are more basic than the standard accounts. These still need to be submitted on time too, or you could face a penalty.

Is there a time limit?

There's no limits on how long you can keep a company dormant for, so there's no need to worry about any warnings from Companies House regarding this.

There's no need to tell Companies House that you're no longer a dormant company either. You would simply complete the annual return (or Confirmation Statement) and submit the standard accounts which vary in size depending on the size of the company.

Remember: keep HMRC up to date regarding Corporation Tax too.

Where can I read more?

We have our own guide to Dormant Companies, which can be found here.

Want to start? We can register your dormant company for you. Click here to start.

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