A dormant company is not accountable for corporation tax purposes. There is no need to let Companies House know that you are not trading until it is time to file your annual accounts. However, you must tell HMRC as soon as you cease to trade and the company is in a dormant state, you can do this by writing to the corporation tax office letting them know the date it became dormant and your company UTR (unique taxpayer reference) and post it to the following address:
Corporation Tax Services
HM Revenue and Customs
So what is a dormant Company?
This is a company that has no accounting transactions during the financial year meaning that it is ‘inactive’ for tax purposes because it is not involved in any kind of trading activity which includes:
- Buying and selling goods and services
- Renting or Purchasing of a property
- Operating a payroll (including directors salary)
- Issuing dividends
- Earning Interest
- Paying accounting fees through the business account
However, there are some activities that HMRC allow to be carried out whilst the company is dormant which include:
- Payment of shares by subscribes (original shareholders)
- Filing fees to Companies House
- Late filing penalties
The reasons a company is dormant can vary, but here’s a few reasons why:
- Protecting a brand name of a company
- Restructuring the business
- Holding assets
- Temporary measure upon personal reasons (eg; death of close family member)
At the end of every financial year the company is required to file a set of accounts to Companies House no later than 9 months after the year end. When a company is dormant it is required to send a set of dormant company accounts (DCA) instead which is an AA02 form.
A dormant company is also still required to send an annual confirmation statement (CS01 Form) to let Companies House know that the information they hold for both the company and its directors/shareholders is still correct and up to date.
When you want to re-activate a dormant company you must inform HMRC within 3 months, if the company has traded in the past then you can simply sign in to your HMRC account and register it as ‘active’ for corporation tax. However, if the company has never traded before you will need to register the company for new services and select corporation tax.