How To Register a Dormant Company
What is a dormant company?
In the UK, a dormant company is a type of company that is registered with Companies House, but it is not carrying out any business activity or trading. In other words, a dormant company has no significant accounting transactions during a financial year, such as sales, purchases, payroll or other trading activities.
Despite not actively trading, a dormant company still has to comply with certain legal requirements such as filing annual accounts and a confirmation statement (previously known as an annual return) with Companies House.
To qualify as a dormant company, it must not have traded since its formation or, if it has traded in the past, it must have ceased trading. It is important to note that a company cannot be considered dormant if it is receiving income from investments, such as interest on a bank account or rental income from a property.
Why register as a dormant company?
There are a number of reasons a company may register as dormant, such as:
● to register a name which can remain dormant and in existence to block the registration of another company with a similar name
● to protect a trading name, to avoid it being registered under another business
● time away from the business is expected, due to illness, maternity leave, travel or other reason
● to hold company assets or intellectual property for future use
How to register your company as dormant
To declare a company as dormant or switch the trading status of an existing company from active to dormant, you must notify HMRC's Corporation Tax office in writing, specifying the date from which the company will become dormant.
You can locate these contact details on any official letter that HMRC has sent to your registered office address, or you can find the Corporation Tax office details online.
Within around 15 days of notification, you should receive a confirmation at your registered office address confirming the acceptance of your company's dormant status.
If your company had previously been trading, HMRC will send a "Notice to deliver a Company Tax Return," which must be completed for the Corporation Tax accounting period preceding the company's dormancy and submitted online to HMRC.
You do not need to inform Companies House when your company becomes dormant, but a confirmation statement and dormant accounts must be submitted each year.
What are dormant company filing requirements?
If you register a new company with the intention of keeping it dormant for a period of time there are several documents that you will need to file.
Maintaining a dormant company requires a few forms to be submitted each year. You can submit these yourself or ask a service provider or account to assist you.
Confirmation statement (previously known as annual return) Every company, including dormant and non trading companies, must file a confirmation statement. It confirms the information Companies House holds on a business is up to date and accurate.
A confirmation statement must be filed each year, including key company details, including:
● company name
● registered office address
● SAIL address (if applicable)
● directors’ details
● company secretary details (if one is appointed)
● shareholders’ details
● location of statutory company records ● information about issued shares
● nature of business activities (SIC codes)
● information about people with significant control (PSCs)
Dormant accounts
Dormant company accounts are simplified accounts (2 pages) prepared by companies that are inactive (not trading) and/or companies that have not spent or received any money during their most recent accounting period. Dormant accounts are straightforward to file, as there will be no significant accounting transactions to report.
That said, the following must still be supplied to Companies House each year via form AA02:
● Company name and registration number
● Balance sheet date
● Details of issued share capital (number and class of shares, nominal value, and total equity of shareholders)
● Net assets – called-up share capital not paid + cash at bank and in hand
● The date on which the accounts were approved by the director(s)
● Name and signature of one of the directors
How do I make a dormant company active?
To make a previously dormant company active, you must inform HMRC within three months of the date you start trading. You can do this by signing in to your account and registering the company as active. If the company hasn’t traded before, you can register online for corporation tax.
Frequently Asked Questions
Do I need to pay Corporation Tax on a dormant company?
No, a dormant company is not subject to Corporation Tax. However, if the company was previously trading, you must pay Corporation Tax on any profits made during that period.
What are the consequences of not complying with the legal requirements for a dormant company?
If a dormant company does not comply with the legal requirements, it may face penalties and legal action. The company may also be struck off the register and dissolved.
How long can a company be dormant?
In the UK, there are no restrictions on the length of time a company can remain dormant. It is entirely at your discretion to decide whether your company remains dormant for a few months, several years, or even indefinitely. As long as you fulfill the reporting obligations of both HMRC and Companies House, and maintain zero transactions, you can maintain the dormant status for as long as you deem fit.