Glossary · UK
What is Dormant Company?
A limited company registered at Companies House that has had no significant accounting transactions during a financial year, allowing it to file simplified dormant accounts and, in some cases, no Corporation Tax return.
Full Definition
A dormant company is a limited company that has had no "significant accounting transactions" during a financial year -- broadly, transactions that would need to be entered in the company's accounting records, excluding a small list of permitted items such as the payment for shares taken by subscribers to the memorandum, filing fees paid to Companies House, and penalties for late filing. A company can be dormant from the moment it is incorporated (common where a company is set up to reserve a name or structure before trading begins) or can become dormant later, for example after it stops trading but the directors do not want to formally dissolve it. Dormant companies must still file a confirmation statement and dormant company accounts each year with Companies House, though the accounts are much simpler than trading company accounts, and the company must notify HMRC that it is dormant to potentially be excused from filing Corporation Tax returns while that status continues, using form CT41G or the equivalent online process. Directors of a dormant company retain their statutory duties even though the company is not trading, and if the company later starts trading again, it must notify HMRC within three months, register for Corporation Tax, and resume filing full statutory accounts and tax returns from that point.