how to make limited company dormant

How to make a limited company ‘dormant’

Victoria Scally News

In recent years it has become fairly easy to form a limited company online (often without all the paperwork you need…..)..

As a result, many owners have companies in the background to ‘save the name’ or just changed their plans and didn’t ever trade them. On rare occasions, a previous busy trading company may become dormant.

In order to keep them live you need to do a few things with Companies House each year.

Making your company dormant is a little more complex than deciding to let it sit there. What is ‘dormant’ differs depending on who is looking at the affairs. The tax people (HMRC) may see it differently to Companies House. It’s entirely possible for you to consider your company dormant when neither of those two do!

HMRC will see you as dormant if your company is:
  • Not trading and does not receive any other income
  • A new limited company that hasn’t started trading yet.
  • A flat management company.
  • An unincorporated association or charity that owes less than £100 corporation tax.

If you are considered dormant by HMRC and they know you are(!), then they will not generally ask for a Corporation Tax Return.

If you are in any way trading, or even earning interest, HMRC may view you as not dormant.

Companies House will see you as dormant if your company is:

One that has had no significant accounting transactions during the accounting period.  

A ‘significant’ accounting transaction is defined as one that the company should enter in its accounting records.  If there are none of these transactions during the financial period then the company can have dormant company status.

The benefit of being dormant is that the filing requirements are a lot less onerous. You can usually just submit a simple set of accounts with Companies House, and a return known as the Confirmation Statement/Persons of Significant Control register.

These can all be filed online for free via their ONLINE TOOL.

Of course, accountants can help you file these accounts and returns and make sure you are dormant.

If you need help, please get in touch – we’d love to have a chat.