A dormant company is a limited company which is not currently operating or generating any income. For example, if you choose to start up a business and register it as a limited company, you may not want to begin trading if the timing is not right for you. Therefore, if you choose to do this you must tell HMRC and Companies House as soon as possible. You can contact them by either post, email, or telephone. If you choose to make your business dormant, your business must not
- Buy and sell goods and services
- Issue dividend payments to shareholders
- Earn interest from bank accounts
- Pay bank charges and fees
- Operate payroll
- Manage any investments
- Pay salaries to directors
- Pay company formation costs and accounting fees via business bank account
- Rent or purchase property
Why would a limited company choose to become dormant?
We have listed some reasons below of why a limited company may choose to be dormant such as:
Can I make my dormant company active?
If you choose to make your dormant company active, you will need to let HMRC know within 3 months. Then again, if your business has operated before, you will need to sign into your HMRC account and register the company as active for Corporation Tax. On the other hand, if your business has never traded before, you will need to register for Corporation Tax online. It is also important that you have your company’s Unique Taxpayer Reference in both of these instances.
Can I make my company dormant?
By selecting to make your company dormant rather than closing it down, you will need to contact the Corporation Tax Office in writing to notify them of these changes. After you have completed and submitted the relevant paperwork, your business will now be classified as dormant. However, if your business was VAT registered, you will need to let HMRC know that you have stopped making VAT on taxable goods or supplies, and you want to cancel this registration. You must make sure you do this within 30 days of your business becoming dormant. This can be done online, or by post using the VAT 7 form. After this, HMRC will send you confirmation in writing and you will be required to file a final VAT Return and pay any VAT that is overdue.
Are there any banking requirements for a dormant company?
Dormant companies do not need any active bank accounts. However, if you choose to make your active business dormant you will need to close any bank accounts that may be related to your business. Therefore, when you decide to start operating your business again, you can open a new bank account for your company.
At Fast Form Online we currently offer a Dormant Company Accounts Service for £39.99 plus VAT. We will take care of this process for you by both preparing and filing the Dormant Accounts for you.
If you would like to find out more information, please contact [email protected].