Jan 13, 2020
UK companies can be made dormant for various reasons. Principally, because they are not trading (making or spending any money.)
The company owner doesn’t want to have to submit complete tax returns on a company that has no income or expenses. HMRC have no interest in trying to get money from an entity that isn’t earning it.
Clients: Let Us Help Make Your Company Dormant (Low fees!)
Companies House classifies a company as dormant if it doesn't engage in 'significant transactions'.
Beware: this phrase has a different meaning here. It means that a company has no transactions that would show up in a balance sheet. Which, unfortunately, means any kind or normal income or expenditure will render your company’s dormant status null.
A company doing any kind of business, however small, is active. It is not dormant.
Note: You still need to file yearly Confirmation Statements and Accounts for a dormant company: you can't just register it as dormant and then forget about it.
The following activities void your dormant status*.
- Managing/making investments;
- Buying and selling goods, services or property in the company name and/or through the company bank account;
- Paying bank charges and fees;
- Receiving dividend payments;
- Earning interest e.g. on a company bank account's deposit;
- Paying accountancy fees through the business bank account;
- Operating a payroll;
- Paying directors’ salaries;
- Issuing dividends.
Ongoing, to retain your company's dormant status, the director may 'gift' expenditure which arises for a dormant company i.e. he pays for the goods or service the company needs and does not bill the company for this outgoing. This could be accountancy fees, maintaining a Registered Office Address, etc.
*Things your company can pay for and still be classified as dormant:
- Penalties for late filing of accounts;
- Filing fees paid to Companies House;
- Payments for shares when the company was incorporated.
Clients: Let Us Help Make Your Company Dormant
Ideal for companies who haven’t started trading yet, but would like to hold on to their company name.