Dormant Company Formation Guide
A dormant company is simply a company that has not conducted any business transactions. You will hear people talk about 'forming dormant companies' but in reality all UK limited companies are dormant when first registered with Companies House as they have no previous trading history. A company will only become active when it begins to buy or sell goods/services under the company name. If a company has previously traded then it can become dormant if it does not trade for a full 12 month accounting period.
There is no limit on how long a company can remain dormant as it will remain in existence if the statutory documents are filed with Companies House. This guide is a general overview of setting up and maintaining a dormant company.
How to form a dormant company
This is very simple. We just form a normal company. There is no special way of forming a dormant company. All companies are dormant the instant that they are formed. They only stop being dormant when they begin to trade.
If a company is buying and selling goods or services then it is ‘active’ or ‘trading’. If a company has not purchased or sold goods or services then it is dormant.
How to keep a company dormant
A common misunderstanding with limited companies is that you need to take action to make them dormant. This is not true and we do not recommend that you pay anyone more money for providing a dormant company. All companies are dormant from the date of incorporation so simply register your company using any company formation service. If a company has not traded they are dormant. A company is deemed to be active (not dormant) when you buy or sell goods through the company. You do not officially register the company as dormant at the time of incorporation.
Some company formation agents claim to sell dormant companies. They may even advertise a special dormant company package. This is a little misleading and they normally charge additional fees to file documents each year. Another gimmick or trick used by some company formation agents is to charge you a fee to either release the company or to make it non-dormant. This again is misleading and we do not recommend that you pay additional fees to register a dormant company.
Documents you will need to file
If you regsiter a new company with the intention of keeping it dormant for a period of time there are several documents that you will need to file. Maintaining a dormant company requires a few forms to be submitted each year. You can submit these yourself or ask a service provider like Simple Formations to assist you.
CT41G – Corporation Tax - Within a few days of forming a limited company HMRC will write to the company. Simply inform HMRC that your company is dormant and that you will inform them within 3 months if the company begins to trade. This can be done with a basic letter or send the CT41G back with a hand written note stating ‘this company is dormant, we will instruct HMRC within three months if the company starts trading’.
Confirmation Statement - If a company is dormant is must still file a confirmation statement to provide Companies House with a brief overview of the officers and address details of your company.
Accounts - The company must also file a set of dormant accounts as proof there has been no trading history over the 12 month accounting period.
If these documents are not filed then Companies House can remove the company from the public register. Whilst filing documents for a dormant company may seem daunting at first. In reality it is quite easy if you have the knowledge. You can find more information on your company filing duties here.
What does the confirmation statement show?
Company name and number
Registered Office
Director details
Secretary details (if appointed)
Share structure and Shareholders (issued shares and share value).
Persons of Significant Control
We can assist with filing your dormant accounts.
LEARN MOREWhy keep a company dormant?
There are many reasons a company may remain as dormant, for example a company may wish to register a name which can remain dormant and in existence to block the registration of another company with a similar name. It is common for people to register the name for this purpose if they want to start a business but are not ready to begin trading and would like to protect the name. Other companies may also register dormant companies to protect trading styles they may use (please note registering a dormant company is not the same as trade mark registration).
To register your dormant company simply search for your name on our website and register the company like any other incorporation. Remember there is no special way of registering a dormant company, you simply need to form a new company which is dormant by default.
