What is a UK Dormant Company?

A dormant company is registered with Companies House but has had no significant accounting transactions during its financial year. In simple terms, it is a legally existing company that is not currently trading.

A company might be dormant because it:

• Has been incorporated but has not started trading
• Has temporarily stopped trading
• Holds a company name for future use
• Was formed to protect a brand or business name
• Is being retained for a future project
• No longer trades but has not yet been dissolved

A dormant company still has legal and filing responsibilities. It will normally need to submit accounts and a confirmation statement to Companies House, even when it has no income or trading activity.

What Counts as a Significant Accounting Transaction?

A company will generally not be dormant for Companies House purposes if it receives income or makes payments that must be entered into its accounting records.

Transactions that can affect dormancy include:

• Receiving payments from customers
• Buying or selling goods or services
• Paying salaries
• Paying rent or other business expenses
• Receiving bank interest
• Paying bank charges
• Purchasing assets
• Earning investment income
• Paying professional or administrative costs from the company’s bank account

Certain payments can be disregarded when Companies House assesses dormancy. These include:

• Payment for shares by the first shareholders when the company is incorporated
• Fees paid to Companies House for filing a confirmation statement
• Fees paid to Companies House for changing the company name
• Late-filing penalties paid to Companies House

If you are unsure whether a transaction affects your company’s dormant status, obtain professional accounting or tax advice.

Dormant for Companies House and Dormant for Corporation Tax

Dormancy does not have exactly the same meaning for Companies House and HMRC.

A company is dormant for Companies House if it has had no significant accounting transactions during the relevant financial year.

A company is usually dormant for Corporation Tax if it has stopped trading and has no other income, or if it is newly incorporated and has not started trading.

It is therefore possible for HMRC and Companies House to assess a company’s position differently. You should check both sets of requirements rather than assuming that notifying one organisation automatically deals with the other.

You can find additional information in our HMRC help and guidance section.

How Do I Tell HMRC That My Company Is Dormant?

If your company has never traded or has stopped trading, you should tell HMRC that it is dormant for Corporation Tax.

You will normally need:

• The company name
• The company’s ten-digit Unique Taxpayer Reference
• The date the company stopped trading, if it previously traded

You can tell HMRC that your company is dormant online.

Once HMRC accepts that the company is dormant, you will not normally need to submit another Company Tax Return unless:

• HMRC asks you to file one
• The company begins trading again

If HMRC has already issued a notice requiring a Company Tax Return, you may still need to submit a return for that period, even if the company was dormant.

You do not normally need to notify HMRC again every few years while the company remains dormant.

If you would prefer assistance with this process, view our service for marking a company as dormant with HMRC.

Does a Dormant Company Need to File Accounts?

Yes. A dormant company must normally submit dormant company accounts to Companies House every year.

Dormant accounts contain less information than full trading accounts, but they must still be delivered by the filing deadline. Failure to submit them on time can result in a late-filing penalty.

The exact accounts required will depend on the company’s circumstances and whether it qualifies as dormant for the relevant accounting period.

CFS can assist with the preparation and submission of dormant company accounts.

Does a Dormant Company Need to File a Confirmation Statement?

Yes. Every registered UK company must normally file a confirmation statement at least once every 12 months, including dormant companies.

A confirmation statement confirms that the information held by Companies House is correct. This can include:

• The registered-office address
• Directors
• People with significant control
• Shareholders and share information
• The Standard Industrial Classification code
• The company’s registered email address

A confirmation statement is separate from the company’s annual accounts.

If you need assistance meeting this requirement, view our confirmation statement filing service.

What SIC Code Should a Dormant Company Use?

The SIC code generally used for a dormant company is:

99999 – Dormant Company

However, selecting SIC code 99999 does not by itself make a company dormant. The company’s actual activities and accounting transactions determine its status.

If the company starts trading, its SIC code should be updated to reflect its new business activity. This can normally be done through the next confirmation statement or by filing an additional confirmation statement.

Can a Dormant Company Have a Bank Account?

A dormant company can have a bank account, but movements of money may affect its dormant status.

Bank charges, interest and other transactions may need to be recorded in the company’s accounts. Some businesses therefore avoid using an active company bank account while the company is dormant.

Before opening, retaining or using an account, check the implications with an accountant and the bank.

Does a Dormant Company Have to Pay Corporation Tax?

A genuinely dormant company will not normally have Corporation Tax to pay because it is not trading and has no taxable income.

However, the company may still need to submit a Company Tax Return if HMRC has issued a formal notice requiring one. You should not ignore a notice from HMRC simply because you believe the company is dormant.

What Happens to VAT and PAYE?

If a dormant company is registered for VAT and does not intend to trade again, it will normally need to deregister for VAT within the required period.

If the company expects to restart trading, it may need to continue submitting nil VAT returns while dormant.

Where the company employs people and does not intend to restart during the current tax year, it may also need to close its PAYE scheme.

Requirements depend on the company’s circumstances, so professional tax advice should be obtained where necessary.

Can a Dormant Company Start Trading?

Yes. A dormant company can begin or resume trading.

When this happens, you may need to:

• Tell HMRC that the company is active
• Register the company for Corporation Tax
• Maintain complete accounting records
• Update the company’s SIC code
• Register for VAT if required
• Establish PAYE if the company will employ staff
• Submit the appropriate trading accounts and tax returns

The company should notify HMRC and meet the relevant filing requirements when it begins conducting business.

Dormant Company Versus a Non-Trading Company

“Dormant” and “non-trading” are sometimes used interchangeably, but they do not always mean exactly the same thing.

A dormant company has no significant accounting transactions during the relevant financial period. A non-trading company may not be conducting its normal business but could still have transactions, expenses or other financial activity.

For example, a company paying professional fees or bank charges might be described informally as non-trading, but those transactions could prevent it from qualifying as dormant for Companies House.

Why Would You Keep a Company Dormant?

Keeping a company dormant may be useful when:

• You want to protect a company or brand name
• The business will begin trading at a later date
• Trading has been paused temporarily
• You want to preserve the company’s incorporation history
• The company has been created for a future project
• A previous business has stopped trading, but you may use the company again

A dormant company must still meet its Companies House obligations, so it should not be left unattended.

Should I Keep a Company Dormant or Close It?

Keeping the company dormant may be suitable if:

• You expect to use it in the future
• You want to retain its existing name
• The interruption to trading is temporary
• You want to preserve its incorporation history

Closing the company may be more appropriate if:

• It will not be used again
• It has no assets, liabilities or outstanding obligations
• You do not want to continue filing accounts and confirmation statements
• Keeping it registered provides no practical benefit

If the company is no longer required, you may wish to voluntarily strike it off the Companies House register instead of continuing to maintain it as dormant.

A dormant company continues to create administrative responsibilities. Consider professional advice before deciding whether to retain or dissolve it.

What Happens if a Dormant Company Misses Its Filings?

A dormant company can receive penalties or be struck off the register if its required accounts and confirmation statements are not filed.

If a company has already been dissolved because its filings were not completed, it may be possible to return it to the register through company restoration. Restoration is a different process from simply restarting a dormant company.

Help With a Dormant Company

CFS Formations can assist with dormant accounts, confirmation statements and selected HMRC services.

You can:

• Mark a company as dormant with HMRC
• Use our dormant accounts filing service
• Arrange help filing a confirmation statement
• Strike off a company that is no longer required
• Read our additional HMRC help and guidance

Alternatively, contact CFS Formations to discuss your company’s circumstances.