Guide to Making Your Limited Company Dormant

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It is really common for Directors to make a Limited Company dormant and there are many reasons they choose to do it.

For example:

  • To hold a business name;
  • The Director wants to take a break;
  • Just in case they ever want to re-start their business;

For a limited company to be made Dormant, there are certain criteria you need to meet.

There are also ongoing certain filing requirements you’ll need to stay on top of otherwise, there may be Companies House and HMRC penalties.

Here are the essential steps you need to follow to make your Limited Company dormant:

How to Make Your Limited Company Dormant

A Dormant Company must have no significant accounting transactions.

Significant accounting transactions means all business income and business expenses except for:

  • Filing fees paid to Companies House;
  • Penalties for late filing of accounts;
  • Paying late filing penalties to HMRC;
  • Money paid for shares when the company was incorporated.

If you are ready to make your Limited Company dormant, then you will need to make sure you have:

  • Paid all suppliers;
  • Submitted all your Limited Company tax returns (CT600) and paid any outstanding tax;
  • Paid all wages and salaries;
  • Checked all your trade debtors have paid you;
  • Have no accruals or prepayments on your balance sheet;
  • Disposed of any fixed assets;
  • Closed your company bank account (not a requirement but a recommendation).

Filing Requirements for a Dormant Company

Even though you have a dormant company, you still need to send Companies House and HMRC certain information each year.

It acts as confirmation that your Company has remained dormant each financial year.

The filing requirements for a dormant company are:

  1. Dormant Company Accounts Online (AA02 Form) annually with Companies House;
  2. Confirmation Statement annually with Companies House;
  3. HMRC Tax Return annually or send a one-off notification that you can file Dormant Company Accounts Online.

How to Let HMRC Know You’ve Made Your Company Dormant

HMRC will continue to request Corporation Tax Returns (CT600) unless you notify them that your Limited Company is dormant.

Failing to let them know may result in penalties for not filing Corporation Tax Returns.

But it is best to let HMRC know about your Dormant Company status to avoid having to deal with their letters.

What Happens if a Dormant Company Starts to Trade

A Dormant Company can remain dormant for any length of time.

However, if a dormant company begins to trade then you must let HMRC know of the change in status. That way they know they need to receive corporation tax returns.

There is no need to let Companies House know about a dormant company change in status. But the Directors must ensure that statutory company accounts are prepared and filed on time.

Dormant Company Accounts