What does it mean for a company to be ‘dormant’?
Being dormant means that a company ceases to trade or carry out any significant transactions but remains registered with Companies House.
If a company proceeds to buy and sell goods, rent property, operate a payroll, issue dividends or even earn interest from a bank account, then it will no longer be considered dormant.
There isn’t a minimum or maximum length of time that you’re allowed to stay dormant – just as long as all obligations are met, then a company can stay dormant for as long as the owner wishes.
Take a look at our Insolvency & Dissolution Services page for more information on this subject.
How to make a company dormant
The first thing you’ll need to do when it comes to making your company dormant is to contact HMRC; you’ll then be issued with a notice for a company tax return as you will have to file a return and ensure you pay any tax liable on profits made before becoming dormant.
If you are registered for VAT then you’ll also need to submit a VAT return paying any VAT due.
If you intend to cease trading altogether without reactivating your company then you must deregister for VAT within 30 days of your company becoming dormant. In this situation, you’ll also need to close your PAYE scheme if you employ people.
A dormant company is still required to submit a confirmation statement and annual accounts to Companies House, even when circumstances haven’t changed during dormancy.
How to reactivate a dormant company
For many, choosing to make a company dormant is just a temporary measure, so when (or if) you wish to start trading again, you will have to let HMRC know within three months of starting up again.
It’s a simple process of registering the company as active.
We hope you found this page helpful. Our team of experts are available to answer any queries you may have, so drop us a line on 01442 795 100, email sophie.lewis@dolanaccountancy.com, or contact us via live chat.
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