Guide to Registering a Dormant Company

Running your own limited company is arguably the best way of contracting. You can enjoy more freedoms and there is the potential to take home more of your hard-earned money. But despite its benefits, there are times when you may wish to stop operating under a limited company for a period of time. Whatever the motivation, it is important to be aware of how to properly make your company dormant.

What is a dormant company?

A dormant company is simply one which has been registered with Companies House but is not actively trading or receiving any form of income. You can choose to make your company dormant from its date of incorporation or after a period of activity.  If a dormant company participates in any kind of trading activity or generates activity, it will forgo its inactive status.

Why should I make my company dormant?

There are different circumstances in which a contractor may want to register their company as dormant. Registration can be beneficial if you want to take a break from contracting and return to permanent employment for a period of time. Alternatively, you may want to register a company for future use.

How do I make my company dormant?

To make your company dormant, you must firstly contact your local corporation tax office in writing with the date which your company has or will be inactive. HMRC will then require a Company Tax Return if your company was previously active. This should be sent to HMRC online before your company can be considered dormant. You will also need to pay any outstanding corporation tax.

Before your company is declared dormant, you will need to close your payroll and ensure all outstanding bills are paid. If the company is owed money from clients, this should also be settled.

What are my obligations once I make my company dormant?

There is no time limit on making your company dormant but once your limited company has been registered, there are certain obligations which you must fulfil.

You will still need to file annual accounts with Companies House. This statement will outline all of your key company dates including director details and information about any shares issued.  Once your company is registered dormant, you cannot have paid employees. Similarly, you cannot pay dividends to shareholders without making the company active again.

How can SJD help?

Getting the best advice regarding your limited company is not always easy. As the UK’s leading contractor accountants, we are well-placed to provide ongoing support with your dormant company’s accounts. For help and advice regarding your company, contact SJD on 01442 330249 or email newbusiness@sjdaccountancy.com