Dormant Company Guide

What is a dormant company?

A company is dormant, in Companies House terms, when it has no ‘significant accounting transactions’ during its financial year — nothing it would need to write into its accounting records.

In practice that means the company is not doing any of the following:

• Buying or selling goods or services
• Renting or purchasing property
• Running payroll or paying directors’ salaries
• Paying or receiving dividends
• Earning bank interest or paying bank charges
• Paying accountancy or other running costs from a company bank account

A small number of transactions are specifically ignored, so these do not end dormancy:

• Payment for shares by the first shareholders when the company was formed
• Fees paid to Companies House — the confirmation statement fee or a change of company name
• Late filing penalties paid to Companies House

Note that bank interest and charges are not on the ignored list — even a few pence of interest counts as a significant transaction. That’s why many owners of dormant companies keep no active company bank account at all.

One wrinkle worth knowing: Companies House and HMRC use slightly different tests. Companies House cares about significant accounting transactions; HMRC cares whether the company is active for Corporation Tax. A properly dormant company deals with both — which is exactly what we handle.

Just want the filings handled? Our dormant company accounts service prepares and files your dormant accounts and confirmation statement and keeps HMRC informed — from £300+VAT, quoted up front.

Why make a company dormant?

Dormancy is the middle ground between running a company and closing it. Common reasons:

• Protecting a company name before you’re ready to launch
• Pausing between ventures — for contractors, a spell in permanent employment is the classic example: make the company dormant rather than close it, and it’s ready the moment you contract again
• Holding a company for future use or during a restructure
• Stepping back for personal reasons — illness, travel, family — without losing the company

Closing a company and re-incorporating later means new registrations, a new company number and no guarantee your name is still available. Dormancy keeps all of that intact.

What does a dormant company still have to file?

This is the part that catches people out: dormant does not mean nothing to do.

• Dormant accounts — filed with Companies House every year, due nine months after the company’s year end. Simpler than full accounts, but just as mandatory, and the same late filing penalties apply.
• Confirmation statement — filed at least once a year. Companies House charges its £50 online filing fee.
• HMRC — once HMRC has agreed the company is dormant for Corporation Tax, it won’t normally ask for Corporation Tax returns. If a notice to file ever does arrive, it must be dealt with, not ignored.

How do you make your company dormant?

There’s no application and no approval process in the UK — but there is a right way to do it:

• Finish the trading period properly. Invoice and collect anything you’re owed, pay every outstanding bill, salary and dividend, and cancel direct debits.
• Close off registrations you no longer need. If the company is VAT-registered, deregister; if it runs a payroll, close the PAYE scheme.
• Tell HMRC the company is dormant, giving the date dormancy starts.
• File the final figures. A Corporation Tax return covering the last trading period, with any tax due paid.
• Think about the bank account. Interest or charges after your dormancy date would break Companies House dormancy — most people close the account or make sure it can’t generate transactions.

Get those steps right and the company sits quietly: just the annual dormant accounts and confirmation statement from then on.

What would end your company’s dormancy?

Any significant accounting transaction — an invoice raised, a payment taken, wages paid, interest received. The company is then active again: full accounts become due for that year, and HMRC needs to know.

If you’re not sure whether something would break dormancy, ask your accountant before doing it. It’s a two-minute question that avoids an expensive surprise.

How do you make your company active again?

When you’re ready to trade:

• Tell HMRC within three months of your first business activity that the company is active for Corporation Tax — done online, with your company details and the date trading started.
• No advance notice to Companies House is needed — the change shows up naturally when your next accounts are full accounts rather than dormant ones.
• Get the practical side ready — bank account, bookkeeping software, VAT and PAYE registrations if you’ll need them.

If you’re restarting contracting after a permanent stint, this is the point to get your accountant lined up so registrations, software and payroll are ready before the first invoice.

Dormant forever — or close the company?

Dormancy makes sense while the company has a future. If it doesn’t — you’re done with the name and won’t trade through it again — filing dormant accounts every year is money for nothing, and closing the company properly is usually the better answer. If you’re not sure which side you’re on, that’s exactly the conversation to have with us.