A dormant company is a limited company that is not trading (i.e. not doing business) and not receiving any other forms of income. In such instances, the company is deemed ‘inactive’ for Corporation Tax purposes.
If your company is dormant, you do not have to tell Companies House until it’s time to file your annual accounts. However, you must tell HMRC that your company is dormant for Corporation Tax purposes as soon as possible.
What is a dormant limited company?
A dormant company is one that has no ‘significant accounting transactions’ during its financial year. Such companies are considered inactive for Corporation Tax purposes because they are not involved in any kind of trading activity, which includes:
- Buying and selling goods and services
- Renting or purchasing property
- Operating payroll
- Paying directors’ salaries
- Issuing shareholders’ dividends
- Managing investments
- Receiving dividend payments
- Earning interest
- Paying bank charges and fees
- Paying company formation costs and accountancy fees through the business bank account
If a dormant company carries on any of these activities, it immediately forfeits its dormant trading status and becomes ‘active’ for Corporation Tax. However, the following transactions are disregarded as ‘significant accounting transactions’ and can be carried out by a dormant company:
- Payment of shares by subscribers (the first shareholders who join the company at the time of incorporation)
- Fees paid to Companies House for filing annual confirmation statements (previously called ‘annual returns’), changing the company name, or re-registering the company.
- Late filing penalties paid to Companies House
Why would a limited company be dormant?
There are many reasons why a limited company would be dormant, such as:
- Protecting a brand name or trademark
- Protecting a company name to prevent it from being registered by another business
- Reserving a company name in preparation for later use
- When restructuring an existing business
- Holding assets or intellectual property
- A temporary measure upon the death or illness of the owner of the business
Companies can remain dormant for any length of time, but there are certain expenses associated with maintaining a limited company on the official register. Furthermore, dormant companies still have certain filing and/or reporting obligations to fulfil for Companies House and HMRC.
Register a dormant company to protect a company name
The only way to protect a company name is to form a limited company. If you don’t do this, your preferred name could be registered by another business.
If you choose to register a company simply to protect a name, there is no need to actually trade through the company at any time. It can remain dormant indefinitely, for the sole purpose of protecting a brand name or trademark.
Dormant company requirements for Companies House
Annual accounts
Directors must prepare dormant accounts for Companies House every year. You’ll need to do this even if the business remains dormant from one financial year to the next. However, dormant accounts are more simplified, so you will only need to include a balance sheet and any relevant notes pertaining to the information included in the account.
Your annual accounts must be delivered to Companies House no later than 9 months after your accounting reference date (ARD). The ARD signifies the end of your company’s financial year. It is usually the anniversary of the last day of the month of company formation.
Annual confirmation statement
All companies, whether active or dormant, must prepare an annual confirmation statement at least once every 12 months. The purpose of this document is to provide confirmation of important company data at a certain date (the ‘confirmation date’). Companies House uses this filing to ensure that the registered details held on public record are accurate and up to date.
The information that you will need to confirm on the statement includes:
- Name and registered number of the company
- Registered office address
- Single Alternative Inspection Location (SAIL address)
- Location of statutory records
- Directors’ details
- Secretary details
- Details of shareholders or guarantors
- Standard Industrial Classification (SIC) code(s)
- Information about share capital
- Information held on the register of people with significant control (‘PSC register)
- The company’s registered email address
The due date for filing a confirmation statement is the anniversary of incorporation or the anniversary of the confirmation date of the last statement. You have 14 days after this date to deliver your confirmation statement to Companies House.
You must submit a statement even if your registered information remains unchanged from one year to the next. If any company details do change, you must tell Companies House as soon as possible and then confirm the changes on the next confirmation statement.
You can report company changes and deliver confirmation statements via Companies House WebFiling service or Rapid Formations’ free Online Admin Portal.
Changing a company from dormant to active
You must tell HMRC within 3 months if your dormant company becomes active. If your company has ever traded in the past, you can simply sign into your existing HMRC online account and register as ‘active’ for Corporation Tax.
If your company has never traded since the date of incorporation, you will have to register for Corporation Tax online and create an HMRC online account. In both situations, you will need your company’s Unique Taxpayer Reference.
If your company is trading for the first time, you must provide the following information to HMRC:
- Full company name
- Company registration number (CRN)
- Start date of business activities
- Address where principal business activities are carried out
- Nature of business activities
- Accounting reference date (i.e. the date you will prepare the annual accounts up to)
It is important to keep and maintain accurate business and accounting records to complete your Company Tax Returns and work out your Corporation Tax liability. If you need help with your accounting and filing responsibilities, we recommend consulting an accountant or professional tax advisor as soon as possible.
If you expect your annual business turnover to exceed £90,000 (2024/25 VAT registration threshold), you will also need to register for VAT. If you employ anyone, you’ll have to register with HRMC as an employer and enrol for Pay As You Earn (PAYE).
There is no need to contact Companies House when your business becomes active. This change of trading status is reported when you deliver your annual accounts.
Do I need a bank account for my dormant company?
Dormant companies cannot spend or receive any money, otherwise they become active for Corporation Tax. The best way to maintain a dormant trading status is to close all business bank accounts in your company name. This removes any potential risk.
Even the smallest entry or transaction, including earning interest or paying bank charges and fees, will forfeit your dormant trading status. If this were to happen, you would be required to prepare full annual accounts for Companies House.
Before closing any active business bank accounts, remember to:
- settle all bills and liabilities, including bank charges and fees
- cancel all direct debits and standing orders
- contact all of your suppliers and service providers to ensure no further payments will be taken from your account
When everything is in order, call or visit your bank to formally close your company’s business bank account.
If and when your company starts trading in the future, you can easily open a new bank account. In the meantime, any incidental costs (e.g. incorporation fees, accountancy fees, etc) can simply be paid through your personal account.
Does my dormant company have to pay tax?
Your dormant company will not have any tax liabilities if it is inactive for the full financial year. Furthermore, there will be no need to prepare annual accounts or Company Tax Returns for HMRC for that period.
If your company stops or starts trading at any time within a financial year, you will be liable to pay tax on any taxable income generated when the business was active. You will also have to prepare company accounts and tax returns for that period.
How to make an active company dormant
If your company was previously trading but is now dormant, you’ll need to tell HMRC that your company is dormant for Corporation Tax. HMRC will then send a ‘Notice to deliver a Company Tax Return’ to your registered office address.
You will be required to prepare a Company Tax Return (including full annual accounts) and pay Corporation Tax on any profits your company made before it became dormant.
From this point on, your company will be considered dormant for Corporation Tax purposes. You should not have to contact HMRC again until your company becomes active again.
If your company was also registered for VAT, you must tell HMRC that you have ceased making VAT-taxable supplies and want to cancel this registration. You will need to do this within 30 calendar days of your company becoming dormant. This can be carried out online, or you can notify HMRC by post using form VAT 7.
If HMRC is satisfied with your reason for cancelling your VAT registration, you’ll receive a letter confirming the date of cancellation. You will need to file a final VAT Return and pay your VAT bill for that period.
Hello ,
If I were to cease trading for a year or 2 for example and left my company in dormant status , do you know if I would still be able to continue paying Class 2 National Insurance contributions as normal , or if I would have to change to Class 3 ?
I pay monthly voluntary class 2 contributions now from abroad based on being self employed , and was reading online that I should still be able to maintain that status also for the period my company is inactive , as long as it is not closed completely ?
Thanks in advance ,
David
Thank you for your kind comment.
Unfortunately as we are not regulated to provide accountancy advice, we are unable to provide advice on specific scenarios. We would recommend contacting an accountant for further assistance.
Please accept our apologies for any inconvenience caused.
Kind regards,
The Rapid Formations Team
Hi,
As a leaseholder I am trying to discover the owner of my freehold. I have checked at The Land Registry and the owner is supposedly a limited company. However, enquiries at Companies House show that this company has been dormant since it’s incorporation and with assets of only seven pounds does not show the freehold interest as an asset on its balance sheet. The company also purports to be the management company for the freehold interest but has never collected any ground rents.
Has the company broken the law and is the freehold title valid?
Regards,
Thanks for getting in touch.
However, we’re very sorry but this is not something that we can advise on.
Regards,
The Rapid Formations Team
Hi, I incorporated a company with rapid formations last November and haven’t traded at all yet. The business will likely start trading in April 2022. Should I register as a dormant company with HMRC and when do I need to do this by?
Thank you for your kind enquiry, Sam.
In general terms, you should inform HMRC your company is dormant as soon as possible, to ensure that you are not requested to submit a Corporation Tax Return. We would recommend contacting HMRC as soon as possible. You can contact HMRC to inform them your company is dormant by phone or by post. For more information, click this link: https://www.gov.uk/government/organisations/hm-revenue-customs/contact/corporation-tax-enquiries
Should you require any further assistance, please do not hesitate to post a follow up comment.
Regards,
The Rapid Formations Team
Hi, I’m considering registering a company(dormat) in order to protect a name however will not be trading in the next 2 years.
I would like to know which address will need to be registered and also can I keep my address private from the public register if I’m not trading? Thanks
Thank you for your kind enquiry, Des.
To protect your residential address from Companies House public register for a dormant company, you should use the services of a professional address service provider – this will enable their address to be used as your own. At Rapid Formations, we can provide you with a Registered Office and Service Address which will fully cover your home address from appearing on the public register, instead using our address of 71-75 Shelton Street, Covent Garden, London, WC2H 9JQ. Any mail received to this address will be scanned and emailed to you on the day we receive it.
Our address services can be added to any of our company formation packages, which can be found here: https://www.rapidformations.co.uk/compare-packages/
I trust this information is of use to you.
Kind regards,
Rachel
Hi
I recently sold two dormant companies I have updated new directors information and resigned. Company was formed in May 2019 so accounts are not due yet. My question is do I have to submit accounts for that period and is there anything else I need to do or inform someone that if new director do something with company it doest come back to me?
Many thanks for your help
Thank you for your kind question, Muhammad.
It is the responsibility of the company, and the directors appointed to it, to ensure that the company’s accounts are filed. Any director presently appointed should ensure this is carried out. Failure to submit the accounts may lead to the company being fined, struck off, or the directors being prosecuted. As you have stated you are no longer a director of these companies, you are no longer responsible for the submission of annual accounts.
I trust this information is of use to you.
Kind regards,
Rachel
We currently have a ltd company business. We are set to launch a separate product offering through our current business but it will also have a separate website with different domain name. Should it remain dormant? No new accounts will be set up. New business will run through current. Hope that makes sense
Hi John,
Thank you for your kind question.
Every limited company in the UK is required to file accounts on an annual basis. If a company has had no significant accounting transactions in the financial year, it can be classified as dormant for Companies House purposes and can prepare ‘dormant company accounts’; however, if it has settled an invoice, paid bank charges, bank interest, paid employees, or paid dividends to shareholders, it will lose its dormant status, as these are all examples of significant accounting transactions. 1st Formations provide a dormant account filing service for limited companies for a fee of £39.99 plus VAT.
Therefore, launching a new product or creating a new website with a seperate domain may not always mean that the company is trading. We would advise that you seek professional accounting advise on this matter to ensure that you adhere to the respective requirements.
With kind regards,
John
WE registered as a limited company in October last year as we wanted to secure and protect our company name. We also opened a bank account which has £500 in it – though the company is not yet live or trading. We will be an online retailer but I will not officially start working on this business until I have left my previous employer which is on 19th April.
Do you think I am still classified as dormant even though we have a bank account? If I have any expenses I wanted to incur for the business BEFORE 20th April e.g. get someone working on a logo for example, would it be better to do this from a personal account? or is it best to bight the bullet and say the company is active already even though I am in a full time job elsewhere and am not ready to start trading?
Hi Lidia,
It’s entirely up to you – there is no issue with paying these setup costs through your business account and making your company active, it just means your accounts and tax returns will be due a couple of months earlier than if you waited until April. Likewise, there’s nothing to stop you using your personal account to pay for these types of costs if you’d rather leave your company dormant until you begin selling.
If you can, I’d recommend speaking to an accountant or business advisor. They will be able to talk things through with you in more detail and suggest the best course of action.
All the best and good luck with the new business!
Hi, i set up a limited company in june 2015. i have never traded on it. what is the easiest way to make it dormant. Do i need to file tax return for dormant company? If it is not marked as dormant what are the implications if i am still not using it.
Hi Dana,
I would advise you to contact the Corporation Tax Office as soon as possible to tell them that your company is dormant. Hopefully there will be no need to file a company tax return but I cannot say for sure. However, please be aware that dormant company’s must still prepare annual accounts (dormant ones, not full accounts) and an annual return for Companies House.
Best wishes
Hi there, I want to make a new company but not start trading until April to coincide with the normal tax year. If I open it dormant for now and then start trading from that date will my tax return be made upto the registered date or the trading date? if the earlier would I be able to change the accounting date to April as its under 3 months which I believe can be changed once… THANKS!
If I choose your basic package (£13.99) does this give me all rights and ownership to the company and name to do with what I please, whenever I decide, or is it one of those services where the company is reserved by yourselves until I decide to start trading when you would then transfer it to me.
Regards
Hi Ryan,
The basic package gives you full ownership of the company. Once registered, it is yours alone and you can start trading whenever you like – we have not control over it. We simply provide the necessary incorporation services that allow you to set up a new ready-to-trade company online.
Best wishes
Hi Rachel
I registered as LTD private company in Nov 2014, my business required a lot of time preparing and I have also used some capital during this preparation period, i expect my company to start trading this year. Can i still file it as dormant as i have started trading and can i claim any refunds from the HMRC for the monies that i have used during the prep period as The HMRC has sent me a tax return form
many thanks
Hi Sabina,
I’m sorry, we cannot advise on your situation as we are not accountants.You would need to speak to an accountant and provide them with a full list and expenditure.
Best wishes
Hi Rachel,
I want to form a dormant company to protect a brand name. I do not expect any accounting actions to happen on this company, however the company name will be used in products.
To make it clearer it will be a video production company and the name of the company will be listed in the titles and credits. However these videos will not be commissions or money making videos (at least initially), they will be simply videos to build brand awareness etc. From there if commissions were to come about I would obviously move the company from dormant to active.
The questions I have are two fold:
Firstly, can a dormant company produce products that are being made available for free and have no direct production costs?
Secondly, does a dormant limited company afford me the same protection should someone sue me, which is why I am avoiding carrying out this venture under a sole trader.
Thanks in advance.
Dear Andrew
Thank you for your message.
Having read your description, we cannot answer your first question as this is a question for an accountant. Regarding your 2nd question, a Limited Company offers you the protection of limited liability whatever activities you undertake so your liability is limited to the value of the shares created.
Kind Regards
Hi,
The family currently have a limited company which we are thinking of making dormant however we do have a reasonable amount of money in it and wish to use for a sole trader business, a different direction. How do we move the money out of the business account without having to pay penalties and then how long do we have to wait to be able to make the company dormant? We are still paying accountants fees as well at the moment.
Thank you
Hi Rachel,
I am in the process of forming a new company limited by shares. I don’t currently have the funds to back me, so I’m thinking make it dormant to protect the name from being used by a competitor. What sort of fees and taxes am I likely to have to pay before my company starts to trade, in the dormant period?
Thanks
Simon
Dear Simon
Thank you for your message.
Prior to trading a company, if that period is more than one year, you will require to file accounts which you can file yourself at Companies House (or if you would prefer an accountant to file them). With regard to HMRC you can write to them and confirm the dormant status of your company and if they agree they will confirm the date they expect you to deliver company information. There is no charge to make this contact with HMRC.
Kind Regards
hi..Rachel Craig,
mine is a dormant company for the last 10 years and not even filing annual returns to ROC for the same period.
now I wish to run the company again (convert it into active status from Dormant)
so please guide me regarding procedure for conversion and consequences for not filing annual returns.
thank you
Prasad.
Dear Prasad
Thank you for your message.
Given the information you have provided it is not normal to keep a company without filing an Annual Return. I would advise checking to find out if the company is still active at the following link https://beta.companieshouse.gov.uk/ and type in the company name or number. If the company is still active there is nothing specific you would need to do to make the company active with Companies House, you would start filing Annual returns with the trade of the company and all other relevant details.
If you need to restore the company to trading with HMRC then you would need to write to HMRC to confirm that your company is active and confirm the date the company became active. You would write to the address on any letter HMRC about the company’s Corporation Tax and should also quote the company’s 10-digit Company Unique Taxpayer Reference number (UTR) which you can find on any Corporation Tax paperwork. The UTR that HMRC are looking for are the 2 blocks of 5 digits which are written after the first 3 digits. HMRC will respond to you by letter to confirm the date when they will next expect Company Tax Return and company accounts
Kind regards
Rachel Craig,
My company was set up a year ago and I haven’t begun trading yet. I received a ‘notice to deliver a company tax’ return from HMRC. I completed the dormant company filling form on companies house and it has been accepted. Do i need to notify HMRC? (The telephone line is crazy. I tried a number of times to get through). If so should I do so in writing?
kind regards
Andrew McQuade
Dear Andrew
Thank you for your message.
You do need to notify HMRC to tell them your company is dormant. You would write to the address on the original letter HMRC send to you called a “CT41G”. On the front page of this letter at the top right hand side is the address of the HMRC Office which you should write to.
The letter you write should contain the date when you expect to being trading and should also mention the company’s 10-digit Company Unique Taxpayer Reference number (UTR) which you can find on the front page of the CT41G under a heading “Reference”. The UTR that HMRC are looking for are the 2 blocks of 5 digits which are written after the first 3 digits.
Given that the company has completed its first year then they may not accept its doormat status though it is likely they will. In either event HMRC will respond to you by letter. If they accept the dormant status they will confirm in their letter when they next expect a Company Tax Return and company accounts to be filed and you need not submit anything to HMRC during the intervening period unless your company begins to trade earlier than expected, when you should write to them again to confirm trade has begun. If they do not accept the dormant status they will remind you of the filing requirements you have.
Kind Regards
Rachel
Hi, If you make an active limited company dormant and close your bank account, where should you keep your initial share holder subscription which in my case is £100 ?
Thank you
Dear Mimi
Thank you for your message.
When you close the company bank account there is no place to keep the monies in the company name so the share capital has been refunded to you as there is nowhere to keep the monies. The share capital will effectively have been refunded to you.
Kind Regards
Hi. I had a company but it has never traded and it is dissolved already. I received a letter saying i failed to pay the annual accounting scheme interim payment which was due on 31.08.2015. i dont understand why should i pay anything when the conpnay was never active. can you help me with thia? what to do?
Dear Andrea
Thank you for your message.
Unfortunately we cannot advise on accountancy matters so if you have any issues you should speak to an accountant.
Kind Regards
Hi, we are a charity and registered company who has recently been awarded a Royal Charter therefore we need to re-register with the Charities Commission as a Royal Charter Charity and have opted to make the company status ‘dormant’ to protect its name. however I am unsure of the next steps and who to notify and what paperwork to complete – help please!
Hello Gwen
Thank you for your message.
Unfortunately we do not provide any services to charity companies and do not have knowledge as to whom you would need to contact regarding updating charity information.
Kind regards
Hi, can a dormant company also be a corporation?
Dear Paul
Thank you for your message.
I am unsure as to what your question means, please feel free to contact us either by telephone or on our livechat service during office hours.
Kind Regards
Hi Rachel,
I have registered a company in UK by one of UK business service provider company (like your compamy) for 3 year ago and we really don,t have almost the time traded it means our company has not actually trading activity too the last year. The UK business service provider company every year for us get filed Annual Return Filing to Company House for this we pay them 80 BP but they also demand to pay them 200 BP for fillng Trading (ZERO) Accounts Filing to Company House.
This connection can you please advise if our company almost not have actually trading activity it is requrement that we must to fillng Trading (ZERO) Accounts Filing to Company House or not?
Please advise.
Many thanks in advance,
Emil
Dear Emil
Thank you for your message.
Yes, all UK companies must file annual return and annual accounts every year. Even your company is dormant you still must comply with the statutory requirements.
Kind Regards
Rachel
Hi Rahcel,
I am currently trying to help a small Ltd company (Ltd by shares) become a Ltd Company by Guarantee (it was originally incorporated incorrectly, as there are no share-holders; only Directors!).
Should I advise them to leave the original Company (Ltd by shares) dormant? Or is there a way of them transferring the accounts from the old company to the new?
Thanks in Advance
Dear JZ
Thank you for your message.
Unfortunately, there is no possibility to re-register limited company by shares to limited company by guarantee. You can only form a new company limited by guarantee and close down limited by shares.
Kind Regards
Rachel
Hi Rachel,
I registered a company over a year ago and I have never traded with it nor does it have a business bank account. I have filed in as a dormant company with Company House but don’t know what to do about HMRC in this regard. Please advise.
Many thanks,
Eze
Hi Eze
Thank you for your message.
You should inform HMRC of your intention to close the company before submitting the DS01 form to Companies House, please see the attached ink for information. https://www.gov.uk/strike-off-your-company-from-companies-register/close-down-your-company
Kind regards
Hello,
I registered a company in comopany house last year, but never registerd it for VAT or tax.
I never done any trading nor i opened any company bank account.
Finally, i have decided that i will never be using this company or any trading activity.
Do i need to do anything for cosing this company or i can leave it as it is and it will automatically will get closed.
Regards,
sanidhya
Dear Sanidhya
Thank you for your message.
You should close the company down yourself by completing a DS01 form for Companies House. The whole process is explained in the attached link https://www.rapidformations.co.uk/blog/closing-a-limited-company/
Kind regards