How to Make a Company Dormant in the UK

Making a company dormant is a legitimate and commonly used option for UK directors who are not currently trading but want to keep their company active on the register. Whether a business has paused operations, has not yet started trading, or is being held for future use, dormancy allows you to remain compliant while keeping ongoing obligations minimal.

In this guide, we explain what a dormant company is, when a company is considered dormant, how to make a company dormant step by step, and how professional support can reduce compliance risk.

What Is a Dormant Company?

A dormant company is a company that has had no accounting transactions during a financial year.
In practical terms, this means the company:

Has not traded
Has not received income
Has not incurred business expenses

A dormant company still exists legally, but it is not actively operating.

When Is a Company Considered Dormant?

A company must meet specific criteria to be treated as dormant, and these criteria are viewed slightly differently by HMRC and Companies House.

HMRC Definition of a Dormant Company

HMRC considers a company dormant when it:

Is not trading
Has no income
Has no corporation tax liability

Once confirmed as dormant, HMRC usually stops issuing corporation tax return requests unless the company becomes active again.

Companies House Definition of a Dormant Company

Companies House focuses on accounting activity. A company is dormant if it has had no significant accounting transactions during the accounting period.
Certain transactions are permitted, such as:

Companies House filing fees
Penalties paid to Companies House

Anything beyond this can break dormant status.

Reasons Why You Might Make a Company Dormant

Making a company dormant is not unusual and does not indicate a problem with the business.
Common reasons include:

The company has not started trading yet
Business activity has temporarily paused
The company is being held for future projects
The company acts as a holding or IP vehicle
The director is restructuring or relocating

Dormancy provides flexibility while keeping the company legally available.

How to Make a Company Dormant in the UK

Making a company dormant involves more than simply stopping trading. The process must be handled carefully to avoid accidental compliance breaches.

Step 1: Stop All Trading Activity

You must fully cease trading. This includes:

Issuing invoices
Receiving income
Paying suppliers
Incurring business-related expenses

Any ongoing activity can prevent the company from being treated as dormant.

Step 2: Settle Outstanding Transactions

Before dormancy begins, ensure that:

All invoices are paid
All debts are cleared
No future obligations remain

Outstanding balances can result in accounting entries that break dormancy.

Step 3: Inform HMRC That the Company Is Dormant

HMRC must be notified that the company has stopped trading. This can be done through the company’s online HMRC account or by written notification.
Until HMRC confirms dormancy, corporation tax obligations may still apply.

Step 4: Prepare and File Dormant Accounts

Even when dormant, the company must file dormant accounts with Companies House each year. These are simplified accounts that confirm the company has had no trading activity.

Do You Need to Tell HMRC If a Company Is Dormant?

Yes. HMRC must be informed when a company becomes dormant.
If HMRC is not notified, the company may:

Continue receiving corporation tax return requests
Be treated as non-compliant
Face penalties for missing filings

Formal confirmation from HMRC provides clarity and avoids unnecessary correspondence.

Dormant Company Accounts Explained

What Are Dormant Accounts?

Dormant accounts are simplified statutory accounts. They usually consist of:

A balance sheet
Limited notes

A profit and loss account is not required for dormant companies.

When Are Dormant Accounts Due?

Dormant accounts follow standard Companies House deadlines:

First year: up to 21 months from incorporation
Ongoing years: 9 months after the accounting period ends

What Happens If Dormant Accounts Are Filed Late?

Late filing can result in:

Automatic penalties
Compliance warnings
Increased risk of strike-off

Dormant status does not remove filing responsibilities.

Does a Dormant Company Need to File a Tax Return?

In most cases, a dormant company does not need to file a corporation tax return.
However:

HMRC must first confirm dormancy
HMRC may still request a return in some situations

Ignoring HMRC correspondence can lead to penalties, even if the company is dormant.

Can a Dormant Company Have a Bank Account?

Yes, a dormant company can keep its bank account open.
However:

The account should not be used
No transactions should occur
Accidental payments can break dormant status

Many directors choose to freeze or closely monitor the account to avoid errors.

Dormant Company vs Non-Trading Company

These terms are often confused but are not the same.
A non-trading company may still have accounting transactions, such as expenses or bank movements. A dormant company must have no significant accounting transactions at all.
A company can be non-trading without being dormant, but a dormant company must always be non-trading.

How Long Can a Company Stay Dormant?

There is no legal time limit on how long a company can remain dormant.
However:

Annual dormant accounts must still be filed
Confirmation statements are still required
Failure to comply can lead to strike-off

Dormancy is indefinite, but compliance remains ongoing.

What Happens If a Dormant Company Starts Trading Again?

If a dormant company resumes activity, the following steps are required:

Notify HMRC that the company is active
Restart accounting records
Resume corporation tax obligations

Failure to notify HMRC can result in incorrect tax treatment.

Common Mistakes When Making a Company Dormant

Directors often encounter issues due to:

Forgetting to notify HMRC
Using the company bank account
Filing incorrect dormant accounts
Missing Companies House deadlines

These mistakes can remove dormant status and trigger compliance problems.

How Persona Finance Helps with Dormant Companies

Persona Finance supports directors and founders with every aspect of dormant company compliance.

Our Dormant Company Services Include:

Confirming dormant eligibility
Notifying HMRC
Preparing and filing dormant accounts
Managing Companies House submissions
Ongoing compliance monitoring

We ensure dormancy is handled correctly, efficiently, and without unnecessary risk.

Dormant Companies for Non-UK Directors

Non-UK directors often face additional challenges, including:

Understanding UK compliance rules remotely
Managing filings from overseas
Avoiding accidental UK tax exposure

Persona Finance works with international founders worldwide, providing clear guidance and end-to-end support for dormant UK companies.

Frequently Asked Questions About Dormant Companies

Can a dormant company pay dividends?
No. Paying dividends requires accounting transactions and breaks dormancy.
Can a dormant company employ staff?
No. Payroll activity prevents dormant status.
Does a dormant company need VAT registration?
No. A dormant company should not be VAT registered or submitting VAT returns.
Can a dormant company be struck off?
Yes, if statutory filings are missed, even when dormant.

Get Help Making Your Company Dormant

Making a company dormant can be straightforward, but small mistakes often create avoidable compliance problems.

If you want certainty that your company is correctly classified, compliant, and protected, Persona Finance can handle the process for you.

👉 Speak with our team to ensure your dormant company meets all UK legal and reporting requirements.