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What is a dormant limited company?

A dormant limited company is simply one which is not trading. The company may never have traded before, or may have ceased trading for any number of reasons, without being shut down. Dormant company directors have a number of responsibilities to fulfil to comply with Companies House rules.

Dormant Limited Company

Why have a dormant limited company?

There are a number of reasons why a company may be ‘dormant’:

1. A company which has previously traded may have ceased operating for a period, but the directors may intend on re-starting the business at a later date, rather than winding up the company.

2. A business may be thinking about starting operations, and has registered a limited company in advance. All companies are ‘dormant’ if no transactions are being conducted through them.

3. In some cases, a business may register a limited company name to prevent competitors from doing so, although you would need to trade mark your company name or brand for full legal protection.

Annual responsibilities

Even though a dormant company is not trading, its directors still have a number of statutory duties to take care of each year.

1. You must file Form AR01 (Annual Return) to Companies House each year, upon the anniversary of the company’s incorporation. The Annual Return provides a snapshot of the company at that moment in time – including details of the company’s officers, its registered address, and share capital information.

2. If your company has traded beforehand, you must submit your company’s annual accounts to Companies House each year (abbreviated balance sheet plus notes), within 9 months of the anniversary of the company ‘s formation. If your company has never traded before, you can submit Form AA02, or fill in a simple webform via the WebFiling service.

3. You must still update Companies House if any changes are made to the details of the company’s officers (via WebFiling).

4. A dormant company must not have any transactions going through it, aside from fees paid to Companies House, payment for shares taken by subscribers, or any late filing penalties.

There is no time limit for keeping a limited company in ‘dormant’ mode, as long as you keep up with your annual filing responsibilities, as detailed above.

How to set up a dormant company

You can set up a limited company online any time via our in-house formations service here.

Do remember, that you cannot ‘form a dormant company’ – every limited company is ‘dormant’ until you start doing business.

If you want to make an existing limited company dormant, you will have to terminate all agreements with current suppliers and customers, empty all your company bank accounts, settle all company debts, and submit final accounts to Companies House together with any outstanding Corporation Tax liabilities. The company only remains dormant if not transactions pass through it.

You should discuss making your company dormant with your accountant before taking any action.

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