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What is a Dormant Company

Define a Dormant Company

If your company is not carrying out any business/trading and does not have any income it may be classed as dormant.

Trading is defined as buying, selling, renting property, advertising, employing someone or getting interest.

HMRC and Companies House have slight different definitions of dormant.

HMRC - Dormant Company

Your company is usually dormant for Corporation Tax if it:

  • has stopped trading and has no other income, for example investments

  • is a new limited company that hasn’t started trading

  • is an unincorporated association or club owing less than £100 Corporation Tax

  • is a flat management company

You may get a letter from HMRC telling you:

  • they’ve decided to treat your company or association as dormant

  • that you don’t have to pay Corporation Tax or file Company Tax Returns

If you think your company is dormant and no longer trading or income you should notify HMRC that it’s dormant for Corporation Tax depending on .

·        Never had a ‘notice to deliver a Company Tax Return’. You can tell HMRC your company’s dormant over the phone or by post.

·        Filed a Company Tax Return or had a ‘notice to deliver a Company Tax Return’ You’ll still need to file a Company Tax Return online - this will show HMRC that your company is dormant for this period.

For Limited companies, once HMRC has been informed you don’t need to pay Corporation Tax or file another Company Tax Return, unless you receive a further notice to deliver a Company Tax Return.

You must still file annual accounts and a confirmation statement exactly what you must do depends on if you’re dormant for Companies House.
If you’re registered for VAT do not intend to trade again you must deregister for VAT within 30 days of your company becoming dormant. However, if you plan to restart trading, you must send ‘nil’ (empty) VAT returns while your company is dormant.
If you employ people and do not plan to restart trading in this tax year, you should close your PAYE scheme.

Companies House - Dormant

Your company is called dormant by Companies House if it’s had no ‘significant’ transactions in the financial year.
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

You do not need to tell Companies House if you restart trading. The next set of non-dormant accounts that you file will show that your company is no longer dormant.
You must file your confirmation statement and annual accounts with Companies House even if your limited company is:

  • dormant for Corporation Tax

  • dormant according to Companies House

But if your company is dormant according to Companies House and also qualifies as ‘small’ you:

  • can file ‘dormant accounts’ instead

  • don’t have to include an auditor’s report with your accounts