Is my company currently dormant?

You can check your company's status on the Companies House register. While it won't explicitly say "dormant," if your company has filed dormant accounts, it indicates its status. Your accountant can also confirm this for you.

Can I put my business dormant, or do I need to wait until the tax return is done?

You can decide to make your company dormant at any time by ceasing trading. However, you will still need to complete any outstanding tax returns and filings for the period up to the point it became dormant. Your accountant can confirm the specifics for your situation.

What happens if my dormant company receives some bank interest?

If your dormant company receives bank interest, it technically has had a 'significant accounting transaction' and may no longer be considered dormant by Companies House or HMRC. You should discuss this with your accountant, as it might mean you need to file full accounts and a Company Tax Return.

How do I reactivate a dormant company?

To reactivate a dormant company, you simply start trading again. You must then inform HMRC that your company is no longer dormant for Corporation Tax purposes. You will then need to prepare and file full trading accounts and Company Tax Returns from that point onwards.

Do I still need a bank account for a dormant company?

While not strictly required, many dormant companies retain a bank account, especially if they hold share capital or need to pay Companies House fees. However, ensure no significant transactions occur through it that would invalidate its dormant status.

Can a dormant company still own assets?

Yes, a dormant company can still own assets, such as property or intellectual property. The key is that it must not be actively trading with those assets or generating income from them (other than very specific exceptions like initial share capital).

Making your company dormant: what it means and how to do it

What does 'dormant' mean for your company?

A company is considered 'dormant' by Companies House if it has had no 'significant accounting transactions' during the accounting period. For HMRC, a company is dormant for Corporation Tax purposes if it's not carrying on business activity and has no income or expenses.

Significant accounting transactions generally mean any transaction that isn't:

Paying fees to Companies House (e.g., for filing the Confirmation Statement).
Paying a penalty for late filing of accounts.
Paying for shares taken by subscribers to the company when it was formed.

If your company has any other income or expenses, such as bank interest, dividends, or payments for services, it's generally not considered dormant.

How to make your company dormant

The process of making your company dormant primarily involves stopping all trading activity and notifying HMRC.

Cease all trading activity: This is the fundamental step. Ensure your company is no longer buying, selling, or providing any services.
Inform HMRC:

Corporation Tax: If your company was previously active, you need to tell HMRC that it has become dormant for Corporation Tax purposes. You can do this by contacting HMRC directly. They will then usually send you a 'notice to deliver a Company Tax Return' with a 'nil' return to complete.
VAT: If your company is VAT registered, you must deregister for VAT if you stop trading and do not intend to make any taxable supplies in the future. You can do this online via your VAT online account or by post using form VAT7 (per gov.uk).
PAYE: If your company operated a Pay As You Earn (PAYE) scheme, you should inform HMRC that you no longer employ anyone or pay directors' salaries. HMRC will then close your PAYE scheme.

Ongoing obligations for a dormant company

Even when dormant, your company still has legal obligations to Companies House. HMRC obligations are generally reduced significantly.

Companies House obligations

Annual Accounts: You must still prepare and file dormant company accounts with Companies House each year. These are simplified accounts, often showing only the share capital and any Companies House fees paid. The deadline is usually 9 months after your company's financial year end (per gov.uk).
Confirmation Statement: You must file a Confirmation Statement (previously known as an Annual Return) with Companies House at least once every 12 months. This confirms that the information Companies House holds about your company is correct. There is a fee for this filing (per gov.uk).

HMRC obligations

Corporation Tax: If HMRC accepts your company is dormant for Corporation Tax, you generally won't need to file a Company Tax Return unless specifically requested. However, if your company later becomes active again, you must inform HMRC.
VAT: Once deregistered, you will have no further VAT obligations.
PAYE: Once your PAYE scheme is closed, you will have no further PAYE obligations.

Implications of dormancy

Making your company dormant has several implications, mainly reducing administrative burden and tax liabilities, but also limiting its activities.

Reduced administrative burden: You'll no longer need to prepare full trading accounts, submit Company Tax Returns (unless requested), or deal with VAT or PAYE if deregistered/closed.
No trading allowed: Your company cannot carry out any business activities, generate income, or incur significant expenses while dormant.
Maintaining company structure: The company remains legally incorporated, meaning its name is protected, and it can be reactivated in the future if you decide to resume trading.
Director responsibilities: Directors still have legal responsibilities, such as ensuring Companies House filings are made on time.

Common mistakes

Confusing dormant with dissolved: A dormant company still exists legally; a dissolved company has been removed from the Companies Register.
Assuming no filings are needed: Dormant companies still have Companies House filing obligations (accounts and Confirmation Statement).
Having 'significant transactions': Receiving bank interest, paying for professional advice, or making any payments beyond Companies House fees can mean your company is not truly dormant.
Not informing HMRC: Failing to tell HMRC your company is dormant for Corporation Tax can lead to unnecessary tax return requests.

Frequently asked questions

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