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Making Your Company Dormant

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You may have heard of, or seen, some companies being marked as dormant by Companies House. But have you ever wondered what they are? Simply, Dormant Companies are companies that are registered with Companies House, but not used. This may be for several reasons, including:

  • Registering a name ready for trading, but not being ready to start trading.
  • To hold a fixed asset such as property. For example, a housing management company is responsible for income and expenditure, but a dormant company can own the property or land.
  • Using it to protect your sole trader trading name. While you're a sole trader, there's nothing stopping anyone from 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 are anything that needs to be entered into accounting records. However, they dont include:

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

Whats the process for registering a dormant company?

There's no special process to register a dormant company. In fact, it's the same as any other limited company. As long as there are no significant transactions during the accounting year, it will be regarded as dormant.

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

There's no need to inform Companies House that the company will be dormant when you first incorporate. However, it is recommended to inform HMRC for the purpose of corporation tax.

From year 2, you will need to complete your Confirmation Statement as you normally would with any company. As part of this, you will need to specify your Standard Industry Classification Code (or SIC code). This is used to indicate what your business does. If your company is dormant, you can use the code 99999.

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 limit on how long you can keep a company dormant, 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 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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