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Frequently Asked Questions

The most common questions we get asked are listed below. If you have any further questions, feel free to contact us.

What is a dormant company?

A dormant company is, quite simply, one that is not active. It does not trade and has no transactions (with some small exceptions). A company could be dormant for any particular financial year or over its whole life since incorporation.

 

However, dormant means slightly different things for Companies House and HMRC:

 

  • For Companies House, a company is dormant if it has had no 'significant transactions’ for the year.

  • For HMRC, a company is dormant if it has not traded and there is no corporation tax liability for the year.

 

Specific circumstances where a company is dormant according to HMRC are if the company:

  • has stopped trading and has no other income, for example investments. Trading includes buying, selling, renting property, advertising, employing someone or getting interest

  • is a new limited company that hasn’t started trading

  • is an unincorporated association or club owing less than £100 Corporation Tax

  • is a flat management company

 

But overall, both definitions are almost identical and it effectively means that if your company is dormant according to one, it is dormant according to both.

What are ‘significant transactions’ according to Companies House?

Significant transactions are any transactions other than:

 

  • filing fees paid to Companies House

  • penalties for late filing of accounts

  • money paid for shares when the company was incorporated

 

So, if your company only had the transactions above for a financial year, then it was dormant for that year according to Companies House. For more information, visit the Companies House website.

What is the difference between a dormant company and a non-trading company?

A non-trading company is not necessarily dormant. It may still continue to have some non-operational activity and therefore undertake certain transactions that don’t relate to its core business. Examples may be paying for certain costs like rent, bank charges and professional fees. In this case, it will not qualify as a dormant company.

Does a dormant company have to remain dormant since incorporation?

No. A company can be dormant for any particular financial year. So, it could begin trading for a number of years, and then go dormant for a year, and subsequently resume trading the year after. It would then be able to file dormant accounts for that year it was dormant. Note that this service is only for companies that have been dormant since incorporation.

Can a company trade and then become dormant later?

Yes, as long as it meets the definition of a dormant company for a full financial year. A company could start off as trading for, say, its first 3 years, and then become dormant in its fourth year.

Do I need to file accounts for a dormant company?

Yes, as long as it is not dissolved. Even if the company is dormant, it is still a statutory requirement to file accounts every year. However, dormant accounts instead of normal accounts can be filed for dormant years.

What are dormant accounts?

Dormant accounts are a much more simplified version of the full set of accounts, with often only have shares and cash in hand/bank on the balance sheet, but there can be more line items if the company traded in previous active years. They are much less burdensome to prepare as several sections can be omitted. Click here to download a sample dormant accounts.

How do I file dormant accounts?

The quickest and simplest way is to file it online yourself using our online service. File now.

When do I need to file dormant accounts?

Usually by 9 months after the financial year-end.

How often do I need to file dormant accounts?

Dormant accounts have the same rules as normal accounts with regard to the frequency of filing. Typically you need to file them once a year.

Who can file dormant accounts?

Any director of the dormant company can file dormant accounts – you do not need an accountant as it is very simple! A quick, cheap and easy way is by filing it yourself through our online service. File now.

What about corporation tax?

Dormant companies do not have to pay corporation tax for the financial year they are dormant. There is also an exemption from filing a corporation tax return. However, if the dormant company becomes active or starts trading part way through its financial year, you will need to file a tax return and may become liable to pay corporation tax.

What about corporation tax returns?

If a company is considered to be dormant by HMRC then it will be exempt from the requirement to file an annual corporation tax return. However, HMRC may still think your company is active so you will need to notify HMRC in advance that your company will be dormant if it meets HMRC’s definition, which can be done by phone or online. They may still require you to send a nil return if you have been sent a notice letter. Quite often in the first year of the company's existence, HMRC may issue you a notice anyway because they don’t know you’re dormant, so make sure to check for such letters to avoid any penalties.

What else must I file as a dormant company?

Apart from dormant accounts to Companies House, you will just need to file the annual confirmation statement. If you have notified HMRC that the company is dormant, you will be exempt from filing a corporation tax return.

What SIC code should I use for a Dormant Company?

The Standard Industrial Classification (SIC) code identifies the main business activity of the company. This is filed with Companies House and for dormant companies it is 99999.

How much does it cost?

It depends. Getting an accountant to prepare and file dormant company accounts would be much cheaper than if they were to file a fuller set of accounts. However, there would usually still be a fee. There is an even cheaper option without the need of an accountant by filing it yourself through our online service. File now.

Do I need an accountant to run a dormant company?

Usually no. Since it is dormant, there is hardly anything to need an accountant for. Even for filing dormant accounts, you can easily and quickly do this yourself through our online service. File now.

Significant transactons
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