Dormant companies and associations

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Dormant companies and associations

Overview

Your company or association may be ‘dormant’ if it’s not doing business (‘trading’).

Dormant means different things for:

Your dormant period stops when you start trading again.

Dormant for Corporation Tax

Your business is usually considered dormant for Corporation Tax if it:

Trading includes buying, selling, renting property, advertising, employing someone or getting interest. HMRC has detailed guidance on what counts as dormant for Corporation Tax.

What you must do if your business is dormant

Being dormant for Corporation Tax means you don’t have to pay Corporation Tax or send (‘file’) a Company Tax Return unless you get a ‘notice to deliver’ one.

Limited companies

You must still file annual accounts and returns - exactly what you must do depends on whether you’re also considered dormant for Companies House.

When HMRC thinks your business is dormant

You may get a letter from HMRC telling you:

  • they’ve decided to treat your company or association as dormant
  • that you don’t have to pay Corporation Tax or file Company Tax Returns (unless you start trading again)

When you think your business is dormant

Use the first Company Tax Return you file after you stopped trading to tell HMRC you’ve become dormant - put a note in the accounts giving the date you stopped trading.

If your accounts cover trading and dormant periods you must file a different return for each period.

Dormant for Companies House

You must file annual returns and annual accounts with Companies House whether your limited company is:

But if your company is dormant according to Companies House and also qualifies as ‘small’ you:

  • only have to send abbreviated accounts
  • don’t have to include an auditor’s report with your accounts

Check what to include in your accounts if your company is small and dormant for Companies House.

Dormant according to Companies House

Your company is called dormant by Companies House if it’s had no ‘significant’ transactions in the financial year that you’d normally report.

Significant transactions don’t include:

  • filing fees paid to Companies House
  • penalties for late filing of accounts
  • money paid for shares when the company was incorporated

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