How To Register a Dormant Company

How to Register a Dormant Company

How To Register a Dormant Company

19 October, 2021

If for whatever reason your company is no longer trading, but you don’t wish to close it permanently, you have the option of registering as a dormant company in the UK.

How to register a dormant company

What is a dormant company?

A dormant company is a limited company that, for whatever reason, isn’t trading and has no transactions either entering or leaving their accounts. That means there are minimal administration and accounting duties to take care of while the company isn’t making any money.

For more information on business terms, check out our glossary of business terms.

When is a company permitted to register as dormant?

A company can register as dormant in the following circumstances:

  • It isn’t trading and receiving income
  • It’s a new company and hasn’t yet started trading
  • It’s a property management company
  • It’s a charity that owes £100 or less in corporation tax

Why register a company as dormant?

There are a number of reasons why you may want to register your business as dormant:

Setting up in advance

If you’re setting up a new business and want to make preparations before you start trading, you can register as dormant. However, this isn’t a common reason today, as setting up a company takes far less time than it did years ago, prior to being able to register a company on the Companies House website.

Setting up your company in advance can still be a viable option though, for instance to secure your company name.

Protect your interests

You may be working as a freelancer or sole trader, but in doing so there’s no way to protect yourself from others setting up a company using your trading name. However, to protect your interests and prevent this, you can register as a dormant company, which means your name is safe and you can continue trading without any of the administrative tasks that goes with running a limited company.

Temporarily not trading

If you need to take a break from trading, but plan on returning to trading at some point in the future, you can register as a dormant company. By registering as dormant, you won’t need to worry about submitting your accounts and can concentrate on the reason for ceasing trade.

If you do choose to close your company, with the intention of restarting it later, there are no guarantees that the name won’t be taken once it comes to you returning to the business.

Hold a fixed asset

It’s common for dormant companies to be set up to hold an asset, such as a property, and is frequently used by flat management companies

When a company is in the process of closing

Before a company closes for good, it’s common for them to be registered dormant prior to closing permanently.

Do you have to register a non-trading company as dormant?

No, however if the company isn’t making money then it’s recommended that it’s registered as dormant to avoid administrative costs and duties.

What’s the difference between a non-trading and dormant company?

While a dormant company cannot partake in any sort of transaction, non-trading companies can. Non-trading companies must also file a tax return through HMRC, which isn’t required of a dormant company.

The process of registering as a dormant company

The process of registering as a dormant company is fairly straightforward, and is done so in the same way the company is registered with Companies House.

What do you need beforehand?

Before heading to the Companies House website to register your company as dormant, you’ll need the following:

  • Your company name
  • Your office address (which can be a home or virtual office address)
  • The name of your Director/s
  • The name of your shareholder/s
  • At least one SIC code for your company

Note: You can use the SIC code ‘99999’ when registering your company as dormant.

Where do you need to enter this information?

All of this information can be entered directly on the Companies House website. The form is simple to use and understand, so long as you have all of the above information to hand.

For a more detailed look at the registration process, check out our post on how to set up a limited company in the UK.

Once the registration is complete, the Companies House website will be updated to publicly display the information about your dormant company.

You will also need to make HMRC aware that your company is dormant.

For help with company formation, get in touch with Hoxton Mix who can take care of this for you.

What happens when you want to start trading again?

You will need to let both Companies House and HMRC know when you want to start trading using a company that has been registered as dormant.

You will then need to send your accounts to Companies House within 9 months of the company’s year-end, and complete your company tax return and pay corporation tax as normal.

Use virtual mailroom services for your business

Looking to register a dormant company with Companies House and need an address? Hoxton Mix can provide you with a prestigious London address you can register, and have your mail forwarded to the address of your choice.