If your company has stopped trading, it may be classed as dormant. But that doesn’t mean that your ongoing compliance responsibilities stop, too. HMRC and Companies House each have their own definition of a dormant company, and understanding these will help you determine whether your company is dormant and what you need to do next.
In this guide, we’ll explain what counts as a dormant company, when (and when not) to tell HMRC your company is dormant, and how to go about it. You’ll also learn what HMRC and Companies House expect dormant companies to do to stay compliant.
A dormant company, put simply, is one that isn’t actually doing any business or receiving income or paying expenses by any other means – from investments, for example.
However, this is a broad definition. It’s best to understand how HMRC and Companies House define a dormant company, as each has a slightly different definition.
HMRC considers a company dormant for Corporation Tax if:
Detailed guidance is available to help you determine whether your company is dormant. Find information on the business activities included in HMRC’s definition of “trading”.
A company is considered dormant for Companies House if it hasn’t had any significant accounting transactions during its entire financial year. This essentially means that the dormant company hasn’t generated income – for instance, earned any interest – or paid any expenses during the relevant period.
All income and expenditure is “significant” unless it is one of these:
Here’s a quick summary of the two dormant company definitions we’ve covered here:
Whether you should tell HMRC that your company is dormant depends on whether it has ever been active.
You should tell HMRC that your company is dormant if it is a limited company intended to be dormant from the date of incorporation. You may, for example, register a dormant company to reserve a company name that you plan to use later.
You still need to tell HMRC if your company becomes dormant after previously being active. Do it immediately after you stop trading. Once you’ve gone through a full financial period without trading, you won’t need to submit Company Tax Returns .
There’s no specific deadline for informing HMRC that an active company is being made dormant. However, HMRC will expect you to keep up with any relevant filings and payments until it knows your company is dormant. Once it does, you don’t need to pay Corporation Tax or file any more tax returns.
Learn more in our guide to dormant companies.
Striking off is a formal process by which Companies House removes your company from its register. In other words, the company is closed for business, or dissolved, and no longer exists. Your company must fulfil very specific criteria to be eligible for voluntary strike off . Applying when your company doesn’t qualify is illegal.
If your company isn’t trading or receiving any income, why not strike it off ? While individual circumstances vary, keeping a dormant company is a more common option. It means you can:
The easiest way to tell HMRC your company is dormant is to use its online service . Alternatively, you can phone HMRC on 0300 200 3410, or send a letter to the following address:
Corporation Tax Services HM Revenue and Customs BX9 1AX United Kingdom
At Rapid Formations, we’ve created a free dormant notification letter template you can download and use to notify HMRC that your company is dormant.
If your company was previously active, double-check that you’ve taken all the practical steps to make it dormant before informing HMRC. These can include:
Once you’ve taken the necessary actions, inform HMRC that your company is dormant.
If your dormant company becomes active, you must notify HMRC within 3 months from the date it starts trading again. This is a legal requirement, and you could face penalties for failing to inform HMRC or for failing to do so on time.
If your company was previously active, you must also resume filing annual tax returns with HMRC and annual accounts with Companies House.
If your company has been dormant since incorporation but you’ve started trading for the first time, you must also add Corporation Tax services to your online HMRC account. You’ll need the following to hand:
Yes, you still need to submit accounts and confirmation statements to Companies House if your company is dormant. HMRC doesn’t expect any further tax returns for your dormant company once you’ve submitted and settled your final Corporation Tax return.
Learn more about the purpose and requirements of your company’s confirmation statement .
Use this dormant company compliance checklist to stay on top of your responsibilities:
Making your company dormant can be a useful way to keep it in place without trading. But it still comes with responsibilities.
To stay compliant, ensure your company meets the dormancy definition applicable to HMRC and Companies House, notify HMRC when required, and continue filing your annual confirmation statement and accounts with Companies House.
If you decide to start trading or receive income again, inform HMRC within 3 months and return to the normal tax and filing requirements.
Need to register, dissolve or make a company dormant? Rapid Formations delivers a range of compliance services tailored to your company’s lifecycle. Explore our Dormant Company Accounts Service .
Not always, but it’s often the simplest way to avoid problems. If your bank account earns interest or has any transactions, this could affect whether the company is treated as dormant. If you’re making the company dormant after being active, closing the account is a practical step that helps demonstrate there’s no ongoing activity.
Yes. A dormant company must still have at least one director and one shareholder. Being dormant only relates to the company’s activity, not whether it has people appointed to run it. Directors remain responsible for keeping the company compliant, including filing accounts and a confirmation statement with Companies House.
There’s no fixed time limit. A company can remain dormant for as long as it continues to meet the relevant dormancy criteria and you keep up with any ongoing filing requirements. If you start trading or receive income again, you’ll need to tell HMRC and resume the usual filings for an active company.