How to Make a Company Dormant on Companies House

Introduction

At Towerstone Accountants we provide specialist limited company accountancy services for directors and owner managed businesses across the UK. We created this webpage for people responsible for company filings and statutory records who want clear guidance on Companies House requirements without jargon. Our aim is to help you understand your obligations, avoid filing errors, and stay compliant with Companies House and HMRC.

Making a company dormant is something I deal with regularly in practice, often where a business has paused trading, a project has not yet started, or a company was set up for future use and then never progressed. Many directors assume dormancy happens automatically when trading stops, but that is not how the system works. Dormancy is a legal and tax status that has to be handled correctly, and if it is not, problems tend to surface later in the form of penalties, strike off action, or unexpected letters from HMRC.

A company can be dormant for Companies House purposes, for HMRC purposes, or both, and one of the biggest sources of confusion is that these two bodies do not always treat dormancy in exactly the same way. Understanding the difference, and knowing what steps to take, is essential if you want the company to sit quietly without causing ongoing issues.

In this article, I am going to explain clearly and practically how to make a company dormant on Companies House. I will cover what dormant really means, when a company qualifies, how to deal with HMRC, what filings are still required, and the common mistakes I see that cause unnecessary stress. This is written from a real world UK perspective, based on how this works in practice rather than theory.

What does dormant mean in a Companies House context

A company is considered dormant at Companies House if it has had no significant accounting transactions during a financial year.

This is a very specific definition, and it is narrower than many people expect.

A company is usually dormant if it has not had transactions other than:

• Payment for shares on incorporation
• Companies House filing fees
• Penalties paid to Companies House

These are known as permitted statutory transactions and do not break dormancy.

Anything beyond this, such as paying accountancy fees, receiving income, paying suppliers, or even opening and using a bank account, usually means the company is no longer dormant for that period.

This definition is important, because Companies House dormancy is about accounting activity, not whether the business feels inactive.

Dormant at Companies House vs dormant with HMRC

One of the most important things to understand is that dormancy is assessed separately by Companies House and by HM Revenue and Customs.

A company can be:

• Dormant at Companies House but active with HMRC
• Dormant with HMRC but not dormant at Companies House
• Dormant with both

For example, a company that has not traded but has paid accountancy fees may not be dormant at Companies House, but HMRC may still accept that it is not trading for Corporation Tax purposes.

This is why it is essential to deal with both bodies properly rather than assuming one will update the other.

Common reasons companies are made dormant

In practice, companies are made dormant for a range of sensible reasons.

Common scenarios include:

• A business pausing trading temporarily
• A company set up in advance of a future project
• A company holding a name or brand for later use
• Group companies not currently active
• Companies retained while winding down activity

Dormancy is a legitimate status, but it still comes with responsibilities.

Step one: stop all trading and business activity

The first and most important step in making a company dormant is to stop all trading activity.

This means:

• No sales or invoices
• No provision of services or goods
• No ongoing contracts being fulfilled
• No advertising or marketing activity

You can still carry out administrative tasks such as paying off old bills, collecting outstanding debts, or preparing final accounts for the period before dormancy. These activities are usually part of cessation rather than ongoing trade.

However, once you intend the company to be dormant, you should aim for a clean break where no further transactions take place.

Step two: ensure no non permitted transactions take place

To remain dormant for Companies House purposes, you must avoid transactions that break dormancy.

This includes:

• Paying accountancy or bookkeeping fees
• Paying software subscriptions
• Paying bank charges
• Paying insurance premiums
• Paying salaries or expenses

This is where many companies accidentally lose dormancy status. Even a small bank charge can mean the company is no longer dormant for that accounting period.

In practice, I often advise clients to close the company bank account if they genuinely want dormancy, or at least ensure it has a nil balance and no ongoing charges.

Step three: deal with HMRC properly

If your company has ever traded, or has ever been registered for Corporation Tax, you must inform HMRC that the company has become dormant.

This is done by contacting HMRC and telling them:

• The date trading stopped
• That the company is now dormant
• That no further Corporation Tax returns should be expected

HMRC may ask for:

• A final Corporation Tax return up to the cessation date
• Confirmation that there will be no further activity

Once HMRC accepts that the company is dormant, they will usually mark the record accordingly and stop issuing Corporation Tax return notices.

Do not assume HMRC will work this out automatically. This is one of the most common mistakes I see.

Step four: check VAT and PAYE registrations

If the company was ever registered for VAT or PAYE, these schemes must be dealt with separately.

For VAT:

• You should deregister if the company stops trading
• A final VAT return will be required
• Any outstanding VAT must be settled

For PAYE:

• A final payroll submission should be made
• The PAYE scheme should be closed
• Any outstanding liabilities must be paid

A company cannot be truly dormant if VAT or PAYE schemes are left open and active.

Step five: update internal company records

While Companies House does not require you to formally notify them that a company is dormant, you should update your internal records to reflect the change.

This includes:

• Board minutes noting cessation of trading
• Records showing the date dormancy began
• Evidence that no further transactions occurred

These records are useful if dormancy is ever questioned by Companies House or HMRC.

Step six: prepare and file dormant accounts

Even when a company is dormant, it still has to file accounts with Companies House.

Dormant accounts are much simpler than trading accounts, but they are still required every year.

Dormant accounts usually include:

• A simplified balance sheet
• Limited notes confirming dormancy
• No profit and loss account

These accounts must be filed by the normal accounts deadline.

Filing dormant accounts is effectively how you tell Companies House that the company is dormant for that financial year.

Step seven: continue filing confirmation statements

This is an area that catches a lot of directors out.

Dormant companies must still file confirmation statements every year.

The confirmation statement confirms:

• Directors
• Shareholders
• Registered office
• PSC information

Dormancy does not remove this obligation. Failure to file confirmation statements is one of the main reasons dormant companies end up facing strike off action.

Step eight: ensure PSC and director details remain accurate

Even while dormant, the company must keep its public record accurate.

This means:

• Updating director changes
• Updating PSC changes
• Updating addresses if they change

Dormancy does not freeze the obligation to keep details up to date.

What Companies House does not require

It is worth being clear about what you do not need to do.

You do not need to:

• Apply to Companies House to become dormant
• Submit a special dormancy form
• Get approval from Companies House

Dormancy is reflected through the absence of transactions and the filing of dormant accounts.

How long can a company remain dormant

A company can remain dormant indefinitely.

There is no time limit on dormancy, provided:

• Accounts are filed on time
• Confirmation statements are filed
• Details remain accurate

However, long term dormant companies often end up forgotten, which is why systems and reminders are important.

What happens if you accidentally break dormancy

If a company has a non permitted transaction during a dormant period, it simply means the company is no longer dormant for that accounting year.

In that case:

• Full accounts may be required
• HMRC may need to be notified
• Corporation Tax obligations may restart

This is not usually catastrophic, but it does mean additional work and cost.

Dormant companies and strike off risk

Dormant companies are often at higher risk of being struck off, not because dormancy is a problem, but because directors forget to file documents.

If confirmation statements or accounts are missed, Companies House may begin strike off action.

This can be avoided entirely with basic compliance.

Should you make a company dormant or close it

In some cases, making a company dormant is sensible. In others, closing it is the better option.

Dormancy may be appropriate if:

• You plan to use the company again
• The company holds a valuable name
• There are future plans on hold

Closing may be better if:

• The company will never be used
• You want to eliminate compliance entirely
• You want a clean break

I often advise reviewing dormant companies annually to decide whether they still serve a purpose.

Common mistakes I see in practice

Based on my experience, the most common errors include:

• Assuming no filings are required once dormant
• Leaving bank accounts open with charges
• Not informing HMRC
• Forgetting confirmation statements
• Paying small expenses that break dormancy

Almost all of these are avoidable.

Practical checklist for making a company dormant

To summarise the practical steps:

• Stop all trading activity
• Avoid non permitted transactions
• Inform HMRC of dormancy
• Deregister VAT and PAYE if applicable
• Close or freeze bank accounts
• File dormant accounts on time
• File confirmation statements every year

Following this checklist keeps the company genuinely dormant and compliant.

When professional advice is helpful

Dormancy is straightforward in simple cases, but advice is helpful where:

• The company traded previously
• There are multiple taxes involved
• There is uncertainty about transactions
• The company is part of a group

An accountant can help confirm dormancy status and avoid accidental breaches.

Final thoughts

Making a company dormant on Companies House is not about filling in a single form, it is about ensuring the company genuinely has no significant activity and continues to meet its reduced but ongoing obligations.

In my professional opinion, dormancy works well when it is deliberate, documented, and monitored. Where problems arise is when companies drift into dormancy by accident and are then forgotten.

Handled properly, a dormant company can sit quietly for years without issue. Handled casually, it can become an unexpected source of penalties, letters, and stress.