15th March 2021

A limited company in a dormant state will tick over, not trade but remains to be at hand when you need it at a moment’s notice. This guide will explain dormancy and when you might put your company in a dormant state.

Simply put, a dormant company is a limited company that is not currently trading.  It will only be able to file ‘dormant’ company accounts if it has not traded for the entire accounting year.

Activity or the lack of

Only insignificant transactions necessary for maintaining its existence can be claimed when a company is dormant, such as bank charges, accountancy fees or Companies House Filing fees and filing penalties.

Administrative Responsibilities

While the company is dormant, a few mandatory administrative tasks are still required for HMRC and Companies House:

• An annual Confirmation Statement must be filed with Companies House to confirm company information like shareholders, names and addresses.
• Annual accounts are still required when a company is dormant, showing the transactions that have gone through the company while not trading.
• If you have a dormant company that has never traded, a form (AA02) needs to be filed.

When would you place your company in dormancy?

If you want to take a break for a while but want to keep the company name, dormancy might just be the perfect solution. It will save you the hassle and the costs of closing down and then incorporating another company again.

Securing a trading name or brand. While you are a sole trader or have plans to grow your brand, you may want to incorporate a company to ensure that the name doesn’t get used by someone else.

How long can you keep a company dormant?

There is no time limit on how long you can keep a company dormant, but you do have to meet all the reporting requirements explained above.

How can MyAccountant help?

If you are thinking about taking a break or going via the umbrella route, company closedown doesn’t have to be the only option; dormancy is a cost-effective way to keep your company at hand.

As mentioned above, we even have a service package that lets you combine our sister company’s umbrella and our dormancy service all under one roof. Click here to find out more.

To discuss your circumstances, please contact info@myaccountant.co.uk or call us on 0800 917 9100.

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