How to Register a Dormant Company

In the UK, every new company is at one point considered dormant– simply because it hasn’t begun trading yet! There are many reasons why a business owner would choose to register and keep a company dormant. For example, if you wish to reserve a company name or reduce your administrative responsibilities.

Setting up a dormant company follows the same standard procedure as registering a limited company in the UK, with one additional step; telling HMRC that your company is dormant for tax purposes.

This blog will guide you through the process of registering a dormant company, covering all the steps, legal requirements and ongoing obligations you will face as a dormant company owner. It will also cover the basics, such as what a dormant company is and why you may wish to register a limited company in the UK as dormant. 

What Is a Dormant Company?

Your company is considered dormant by Companies House if it has had no ‘significant’ transactions. This does not include your Companies House filing fee, penalties for late filing of accounts, and money paid for shares when the company was incorporated.

Essentially, a dormant company is a company which has not conducted any business activity or received any kind of income. In a way, all new companies are dormant at their inception. A company can be dormant from the date of its incorporation or become dormant after a period of trading. 

Why Might a Company Be Dormant? 

There are many reasons why a company may be dormant. They are particularly useful if you wish to protect a company name or want to plan future ventures. This is because, with a dormant company, you will have fewer filing obligations– which this blog will elaborate on later. Secondly, dormant companies are exempt from corporation tax until they start trading.

For example, a sole trader who is hoping to register as a limited company in the future may set up a dormant company in the meantime. This allows them to reserve and protect their company’s name from being claimed by another business (as Companies House will not allow you to trade with a name that is already registered) while they prepare.

Secondly, dormant companies allow you to plan for future trading. Entrepreneurs can create dormant companies to prepare for future ventures without incurring immediate tax and filing obligations. 

Initial Steps To Register a Dormant Company

Setting up a dormant company is very similar to registering a limited company. Particularly if you register your company online with us. We’ve been creating companies since 2001, offering a range of packages, including a package specifically designed for those looking to register a dormant company.

We pride ourselves on delivering a simple and pain-free formation process, offering advice and support for every step of your journey.

Most importantly, once your details are confirmed and registered at Companies House, we’ll maintain our dormant company on your behalf.

Forming a dormant company can be done in five easy steps: 

Step 1: Choose your company name

Picking the right company name is crucial for your dormant company. A company’s branding begins with a name. More importantly, you can not register a company, whether dormant or not, without a name. Your company name must be available and compliant with Companies House’s naming rule.

• Rules for Naming Your Limited Company

An easy way to check if your name is available for use is by using a name checker tool, simply input your desired company name and we can tell you whether it's available for use or not!

Step 2: Select a Package

We offer several packages suited to your needs, from our basic service to our ultimate. However, for a dormant company, we recommend you choose our ‘Reserve a Company Name’ service. This service is designed with dormant company registration in mind. The service renews annually, giving you lots of time to decide when to start trading. In the meantime, we’ll file your dormant company accounts and confirmation statement for you until you’re ready to start trading.

With our ‘Reserve a Company Name’ service, you can register your dormant company in a few simple steps. Most likely, your company will be registered same day or within 24 hours. 

Step 3: Send Us Your Details

Once you’ve selected and paid for your package, we will send you an email with an application form attached. Simply send us the completed form and we’ll process and submit it on your behalf.

You must double-check your details, including sending a clear ID photo, so your application can be submitted without delays. 

The application form will take less than 10 minutes to complete, especially if you prepare. You’ll need to determine your main business activity and your Standard Industrial Classification (SIC) Code. For a dormant company, the SIC code is 99999- make sure to select this. Once your company is ready to trade, you an change the SIC code to the right classification.

You’ll also need to appoint a director and shareholder and allocate shares. At a minimum, you must have one director and shareholder, but you can appoint more than one.

• What Do I Need To Prepare For a Company Application?

We provide a template for Memorandum and Articles of Association which suit most businesses, however, you can also upload a custom template.

Then simply review your application and email it back to us. We will process and notify Companies House. Once you’re registered at Companies House, your company will appear on the online register as dormant. 

Step 4: Setting Up the Company As Dormant With HMRC

One final step to registering a dormant company is to tell HMRC. This ensures you do not pay any corporation tax on your company. You must do this after your company has been formed.

If you do not tell HMRC that your company is dormant, HMRC will expect you to file Company Tax Returns to report your business income, expenditure, and taxable profits. If you fail to do this, you can be penalised. So skip the future trouble and tell HMRC that your company is dormant. 

Filing Requirements for a Dormant Company

As a dormant company, you’ll still need to file accounts such as a confirmation statement and dormant company accounts. With our Reserve a Company Name service we’ll keep your accounts updated.

However, if you choose a different package, or create the dormant company yourself, then it is your responsibility to file your accounts. 

Dormant Company Accounts

Dormant company accounts must be filed annually until the company begins trading. They are a simplified version of accounts which confirm that your company has had no ‘significant’ transactions. It simply provides Companies House with some basic information about your share capital. 

Confirmation Statement 

A confirmation statement is required by all limited companies. It provides Companies House with a snapshot of your company’s details such as where your company is based. This must be filed yearly, whether the company is dormant or not.

Filing for a dormant company is far more simplified than filing for a trading limited company. However, it's still important to make sure your company’s files are up to date and correct. This is why our Reserve a Company Name service is ideal for dormant companies. Our team of experts will keep your company’s accounts updated and keep your company compliant. Whilst you can focus on planning for the future. 

Corporation Tax for a Dormant Company

Once HMRC is aware of your company’s dormant status which you can do by accessing the gov.org portal, your company will be exempt from corporation tax.

When you are ready to trade, you must immediately notify HMRC and begin paying tax returns on your profits.

If your company was previously trading before then you need to pay any outstanding tax before becoming dormant. 

Reverting a Dormant Company to Active Status 

When you eventually decide to make your dormant company active, you must contact HMRC within 3 months of trading and receiving income.

Secondly, if you’ve never traded before you must register for corporation tax.

You will need to create a Government Gateway account and provide the following statutory information:

• Company name
• Company number
• Address where principal business activities are carried out i.e. your registered office address
• Standard Industrial Classification (SIC) code – the nature of your company’s main business activities
• Accounting reference date (ARD) – the date up to which your company accounts will be prepared
• Date your company became active – this will be the start of your company’s accounting period for Corporation Tax

HMRC, in turn, will update their records and work out your accounting period, which runs from the first day of trading until your ARD for your company’s annual returns.

It’s important to maintain accurate accounting records to ensure you meet your corporation tax deadlines and avoid any penalties. Some business owners hire a tax advisor or accountant to help them stay compliant. 

In summary, registering a dormant company in the UK is a straightforward process and a great way to reserve a company name or plan for future business with minimal administrative responsibilities. While similar to setting up any limited company, the key difference lies in telling HMRC of your company's dormant status to make sure you're exempt from paying corporation tax.

Although dormant companies have fewer filing requirements, you’ll still need to submit dormant accounts and a confirmation statement to Companies House. Our Reserve a Company Name service makes this even easier by taking care of all the necessary filings while you focus on your next steps. So why not take the plunge and register your limited company? When you're ready to start trading, simply inform HMRC, and you'll be all set to begin your business journey.