What Is a Dormant Company in the UK?

Editor’s note: Originally published on 15 January 2023; this article reflects information available at that time, and rules may since have changed.

A company can be “dormant” for Corporation Tax purposes, Companies House purposes, or both. The definitions are related but not identical, so the company’s actual transactions must be reviewed.

Why keep a company dormant?

Dormancy can preserve the company name, ownership structure and intellectual property while trading is paused. It may also reduce the amount of accounting work required, although statutory filings do not disappear.

Tell HMRC

If a company has stopped trading and has no Corporation Tax liability, HMRC should be informed. HMRC may still require a Company Tax Return for a period before it accepts the dormant status.

File with Companies House

An eligible dormant company may file dormant accounts, but it must continue to file a confirmation statement and keep its registered-office details and company registers up to date.

VAT and payroll

A VAT-registered company may need to cancel the registration or continue filing nil returns. A PAYE scheme may also need to be closed or maintained correctly. Do not leave registrations unattended simply because trading has stopped.

Avoid accidental transactions

Bank charges, interest, purchases or sales can affect dormancy. Review the bank account and subscriptions before relying on dormant status.

Leon Advisers can review whether dormancy is appropriate and prepare the required filings. Contact info@leonadvisers.com.