Guide to what "Dormant" and "Non-Trading" means for a Limited Company
This guidance applies to small companies only.
• The defintions of "dormant"
• Companies House
have different definitions
for the terms "dormant"
• When a limited company is first "incorporated"
Companies House automatically informs HMRC. However, as at October 2016, no further information passes between them on the subject of dormancy and trading / non-trading.
• It is the responsibility of the company's Directors
to inform Companies House and HMRC of any changes to the dormancy and trading status of the company.
• If a trading company now wants to become dormant / non-trading, the directors must:
> Inform HMRC
> File annual Dormant Accounts
with Companies House
> File the annual Confirmation Statement
with Companies House plus a £13 fee
• Link to GOV.UK: Dormant companies
has the following definitions and regulations:
• A limited company is dormant
from the day the company is first incorporated at Companies House to the day before the company starts trading
• For this first period (no matter how long) when the company remains dormant
for HMRC, there are no requirements to file Annual Accounts
or Corporation Tax
• Traditionally HMRC assume that a company is dormant unless the company's directors inform HMRC that the company has started trading. However, in recent years, HMRC have experimented with assuming instead that the company is trading from the outset. HMRC will write to the Directors at the company's Registered Office if HMRC is expecting Acccounts and Corporation Tax to be filed.
• The company's Directors
must inform HMRC that a company has started trading
within 3 months.
• Once a company has started trading, but then stops trading, for HMRC the company can be classified as "non-trading"
. The GOV.UK Webpage
uses the term "Dormant for Corporation Tax" but technically it is now "non-trading". The company's Directors must inform HMRC if a company becomes non-trading, otherwise the company will be assumed to be trading, and all the filing requirements remain in place.
• HMRC will allow a company to be classified as non-trading for a period of up to 5 years. The company will not be required to file Accounts or Corporation Tax for this non-trading period.
• This is a link to GOV.UK: HMRC guidance on Corporation Tax: trading and non-trading
• No fee is paid to HMRC for dormant and non-trading accounting periods.
Companies House Regulations