Setup A Dormant Company In Minutes

Both Companies House and HMRC have their own definition of what is a dormant company.
HMRC defines a dormant company as a company which:

1. Is a newly incorporated limited company that has not yet started trading;
2. Has stopped trading and has no other income (such as investments);
3. Is an ‘unincorporated association’ or club owing less than £100 Corporation Tax;
4. Is a flat management company (also know as 'right to manage')

Companies House define a dormant company a company which SIC code (Standard Industrial Code) is 99999. Such company Companies House has had ‘no significant accounting transactions’ during its financial year, i.e. any transaction which should be entered in a company’s accounting records. For a company to be dormant for Companies House, its transactions must be limited to:

1. Payment for shares;
2. Fees paid to Companies House for a change of company name;
3. Re-registration of a company;
4. Filing confirmation statements (formally known as annual returns) and annual accounts;
5. Payment of penalties imposed by Companies House

Both Companies House and HMRC have their own definition of what is a dormant company.
HMRC defines a dormant company as a company which:

1. To set up a company you intend to use in the future:
   You might have a new business idea in mind and want to get everything set up in advance. Alternatively, you could have preparation to do before you can actually start trading. By forming a dormant company, you can be ready to trade at short notice, and in the meantime it can remain dormant.
2. To protect a business name:
   You want to ensure the company name is registered to prevent your competitors from doing so. Unless you register a dormant company, there is nothing stopping someone else forming a limited company with the same name as your business. This why many sole traders decide to set up a dormant company even though they prefer operating as self-employed.
3. To hold a fixed asset such as a property:
   You can set up a limited company - sometimes called a Right to Manage or flat management company - so residents can jointly run a property. For such flat management companies, a separate Residents’ Association Company will usually handle management income, expenses and legal issues, meaning that the flat management company itself should meet the conditions required of a dormant company

As any limited company, you must file a confirmation statement every year as well as the company dormant account. We recommend that you select the “Compliance Package” during the registration process which includes all your yearly statutory filing.

The easiest way to make a dormant company active is to change its activity (SIC code) from “99999” to any activity SIC code. You need to change the status of your company within 3 months of becoming active. Alternatively, you can also sign up into your company's HMRC gov gateway account and change the status of the company to ‘active’ for Corporation Tax.