Dormant Companies and Associations: What You Need to Know
Understand the requirements for dormant companies and associations regarding Corporation Tax, Companies House filings, and more. Learn when your company may be considered dormant and what obligations you still need to fulfill.
Company is not doing business and has no other income
New Limited Company
Hasn't started trading yet
Unincorporated Association
Owes less than £100 Corporation Tax
Flat Management Company
Specific type of property management entity
A company or association may be considered 'dormant' if it's not actively trading or generating income. This status has different implications for Corporation Tax, Company Tax Returns, and annual accounts for Companies House.
Dormancy for Corporation Tax
Stopped Trading
No business activities or other income sources
No Income-Generating Activities
Includes buying, selling, renting property, advertising, employing someone, or earning interest
HMRC Notification
You may receive a letter stating your company is considered dormant
Self-Declaration
You can inform HMRC if you believe your company is dormant
Filing Requirements for Dormant Companies
1
Company Tax Return
If you've previously filed or received a notice, you must still file online to confirm dormancy
2
Annual Accounts
Limited companies must continue to file annual accounts with Companies House
3
Confirmation Statement
Previously known as annual return, must be filed even when dormant
4
VAT Deregistration
If not intending to trade again, deregister for VAT within 30 days of becoming dormant
Dormancy for Companies House
Definition
Companies House considers a company dormant if it has had no 'significant' transactions in the financial year. This differs from HMRC's definition for Corporation Tax purposes.
Excluded Transactions
Certain transactions don't affect dormant status: - Filing fees paid to Companies House - Penalties for late filing of accounts - Money paid for shares during incorporation
Filing Requirements
Even if dormant, you must still: - File a confirmation statement - Submit annual accounts Small dormant companies may file simplified 'dormant accounts'
VAT and PAYE Considerations for Dormant Companies
VAT Deregistration
If not planning to trade again, deregister for VAT within 30 days of becoming dormant
Nil VAT Returns
If planning to restart trading, submit 'nil' (empty) VAT returns while dormant
PAYE Scheme
If not planning to restart trading in the current tax year, close your PAYE scheme
Handling VAT and PAYE correctly is crucial when your company becomes dormant. Ensure you take the appropriate actions to stay compliant with HMRC regulations.
Restarting a Dormant Company
1
Decision to Restart
Determine if and when you want to resume trading
2
Inform HMRC
No need to explicitly inform HMRC about restarting
3
File Active Accounts
Submit non-dormant accounts to Companies House
4
Resume Trading
Begin business activities and fulfill all active company obligations
Reactivating a dormant company is straightforward. You don't need