Dormant Company — What It Means and How to Manage

What is a dormant company?

A company is "dormant" if it has had no significant accounting transactions during the accounting period. The only transactions allowed are:

• Payment for shares when the company was incorporated
• Filing fees paid to Companies House
• Late filing penalties

If the company has received any income, paid any expenses (other than the above), or had any money move through its bank account for business purposes, it is not dormant.

Why keep a company dormant?

Common reasons include:

• Protecting a company name — registering a name early to prevent others from using it while you plan your business.
• Taking a trading break — a seasonal business or one on hiatus that plans to resume trading.
• Holding assets — property holding companies that are not actively trading.
• Pre-launch preparation — setting up the structure before the business is ready to trade.

Filing requirements

Even though the company is not trading, you must still file:

The dormant accounts filing is a simplified balance sheet confirming no significant transactions took place. It can be filed online through Companies House WebFiling and takes about 5 minutes.

Important:late filing penalties apply to dormant companies just the same as active ones. Miss the deadline and you will owe £150 minimum.

Tax obligations

If you have told HMRC the company is dormant, you do not need to file Corporation Tax returns. However, you must notify HMRC when the company starts trading again (within 3 months of the first transaction).

To tell HMRC your company is dormant, write to them or call the Corporation Tax helpline. They will mark your account accordingly and stop expecting returns. If you fail to notify them, they may continue to issue penalties for non-filing.

Reactivating a dormant company

When you are ready to start trading again:

1. Notify HMRC within 3 months of the first transaction
2. Register for Corporation Tax (if previously deregistered)
3. Register for VAT if you expect to exceed the £90,000 threshold — see our VAT guide
4. Set up a business bank account if the old one was closed
5. File full (non-dormant) accounts for the first active period

Dormant vs dissolved

A dormant company still exists on the register and can be reactivated at any time. A dissolved company has been removed from the register entirely. If you have no plans to use the company again, striking it off is cleaner and avoids the ongoing obligation to file the confirmation statement.

What happens if you forget to file?

Companies House does not care whether your company is dormant or active — late filing penalties are automatic. If you consistently fail to file, Companies House may start proceedings to strike the company off the register (compulsory strike off). You will receive warning letters first, but if you ignore them, the company will be dissolved.