{"id":1551,"date":"2019-09-13T09:00:24","date_gmt":"2019-09-13T09:00:24","guid":{"rendered":"https:\/\/www.mintformations.co.uk\/blog\/?p=1551"},"modified":"2025-07-30T15:41:50","modified_gmt":"2025-07-30T15:41:50","slug":"what-is-dormant-company","status":"publish","type":"post","link":"https:\/\/www.mintformations.co.uk\/blog\/what-is-dormant-company\/","title":{"rendered":"What is a dormant company?"},"content":{"rendered":"<h3>There are several reasons why a company may be dormant. This article defines what it means to have a \u201cdormant company\u201d \u2014 and the various implications attached to one.<\/h3>\n<h3>The definition of a dormant company<\/h3>\n<p>A dormant company is a company that has ceased trading and does not receive any form of income \u2014 including \u201cexternal income\u201d such as investments. However, the company may still be using the services of a <a href=\"https:\/\/www.mintformations.co.uk\/services\/london-business-address\/registered-office\/\">registered office address provider<\/a> and will remain registered at <a href=\"https:\/\/www.gov.uk\/government\/organisations\/companies-house\" target=\"_blank\" rel=\"noopener noreferrer\">Companies House<\/a>. Dormant companies also still need to file annual returns and keep their information up-to-date with Companies House.<\/p>\n<h3>What constitutes forbidden trading for a dormant company?<\/h3>\n<p>Since a dormant company is one without significant accounting transactions, there are certain types of activities that a dormant company should not be practising. They include:<\/p>\n<p>Buying or selling goods and services.<br \/>\nProperty purchasing or renting.<br \/>\nOperating payroll.<br \/>\nPaying directors\u2019 salaries.<br \/>\nIssuing shareholders\u2019 dividends.<br \/>\nManaging investments.<br \/>\nReceiving dividend payments.<br \/>\nEarning interest.<br \/>\nPaying bank charges and fees.<\/p>\n<p>A dormant company will immediately lose its inactive trading status if it practises any trading activity. It will subsequently be considered \u201cactive\u201d for Corporation Tax purposes.<\/p>\n<h3>What constitutes permitted trading for a dormant company?<\/h3>\n<p>The following transactions are not considered to be \u201csignificant accounting transactions\u201d and may be carried out by a dormant company:<\/p>\n<p>Payment of shares by subscribers (the first shareholders who join the company at the time of incorporation).<br \/>\nAdmin fees paid to Companies House for processing an annual confirmation statement, changing a company name or re-registration.<br \/>\nPenalty payments to Companies House.<\/p>\n<h3>Why would a company be dormant?<\/h3>\n<p>A company may remain dormant for any length of time and for many reasons, including:<\/p>\n<p>To protect a company name to stop another business from registering it.<br \/>\nTo restructure an existing business.<br \/>\nTo hold assets or intellectual property.<br \/>\nAs a temporary measure to cover the death or illness of the business owner.<\/p>\n<p>There is no limit to the length of time a business can remain dormant. However, there are certain expenses associated with maintaining a company on the official register.<\/p>\n<h3>What does Companies House require from a dormant company?<\/h3>\n<p>Companies House will request the following from a dormant company:<\/p>\n<h3>Annual accounts<\/h3>\n<p>Each year, directors have to prepare <a href=\"http:\/\/resources.companieshouse.gov.uk\/webfiling\/demoVideos\/dormantAccounts.shtml\" target=\"_blank\" rel=\"noopener noreferrer\">dormant accounts<\/a> for Companies House \u2014 even if the company remains inactive for the fiscal year in question. The accounts must include a balance sheet and any appropriate notes. Companies House must have these no later than nine months after the <a href=\"https:\/\/companieshouse.blog.gov.uk\/2015\/12\/23\/a-guide-to-accounting-reference-dates-and-periods\/\" target=\"_blank\" rel=\"noopener noreferrer\">accounting reference date<\/a> (ARD).<\/p>\n<h3>Annual confirmation statement<\/h3>\n<p>At least once a year, all companies have to prepare an <a href=\"https:\/\/www.gov.uk\/file-your-confirmation-statement-with-companies-house\" target=\"_blank\" rel=\"noopener noreferrer\">annual confirmation statement<\/a>. Dormant companies are no exception. This information, provided to Companies House, is used to confirm the details held on the public record. The statement is used to verify details such as the name and registered number of the business and information about share capital.<\/p>\n<p>Your company must submit a confirmation statement even if its details have not changed. If any business data does alter, you should notify Companies House as soon as you can.<\/p>\n<h3>Do dormant companies have to pay tax?<\/h3>\n<p>If it\u2019s inactive for the entire financial year, a dormant company is not liable to pay tax. So you will not need to prepare accounts or tax returns for that period.<\/p>\n<p>However, if your company begins or ceases to trade at any time within a financial year, any income generated will be liable for tax during the active period.<\/p>\n<h3>Don\u2019t forget&#8230;<\/h3>\n<p>The major benefit of a dormant company is company name protection. If you don\u2019t form a limited company, then you risk losing your company name! Another entity could register their own company using your desired business name. Remember, your company can be registered as dormant for its entire life to protect your brand!<\/p>\n<h3 style=\"text-align: center;\">Do you need help with <a href=\"https:\/\/www.mintformations.co.uk\/dormant-company-accounts\/\">dormant company accounts<\/a>? Our leading formations service will help you every step of the way. Contact Mint Formations today to find out more!<\/h3>\n","protected":false},"excerpt":{"rendered":"<p>There are several reasons why a company may be dormant. This article defines what it means to have a \u201cdormant company\u201d \u2014 and the various implications attached to one. The definition of a dormant company A dormant company is a company that has ceased trading and does not receive any form of income \u2014 including [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":1557,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[],"class_list":["post-1551","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-business-advice"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v25.5 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>What Is a Dormant Company? | Mint Formations<\/title>\n<meta name=\"description\" content=\"What\u2019s the difference between an active and dormant company? 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