Are you considering starting a business in the UK (but not quite yet)? Consider setting up a Dormant Company.

A dormant company is an excellent solution if you have a brilliant business idea but are not quite ready to launch. You may be waiting for the right time to launch, or you need to secure some business start-up funding before you can put your plans in motion. This is where registering a business as a dormant company comes in.

This guide explores the benefits of setting up a dormant company in the UK and the simple steps involved. We will also explain how Your Company Formations, a trusted agent specialising in making the incorporation process efficient and affordable, can help you with this step.

What is a dormant company?

A dormant company is a legally registered limited company in the UK that is not currently trading. This means it isn't actively conducting business or generating income. Dormant companies are helpful in reserving a company name or delaying the launch of your business for a later date.

While Companies House offers its own online and postal incorporation services, their process can be more intricate and their support limited. For a smoother experience, we will guide you through our own streamlined online formation process, ensuring a swift and efficient company setup.

Here, we go over the steps to prepare all the information you need to form a dormant company.

Step 1: Choosing Your Company Name

The journey begins with choosing a unique and memorable name for your company. As this will be your legal identifier, even for a dormant company, it is crucial to ensure its availability before proceeding. You want to ensure someone else hasn't already used your preferred name.

Here at Your Company Formations, the process is simple. Head to our homepage and use our user-friendly company name search tool. Enter your desired name, and our system will instantly check its availability. If it is clear, you are good to go! If not, try adding unique variations of your preferred company name to see if you can find something relatable to your business.

You must also avoid using 'sensitive words' within your company name. Companies House will refuse your application if you do so. For more information about using sensitive words in company formation, see our post: Sensitive Words When Forming A Company.

Step 2: Select Your Formation Package

Your Company Formations understands that every business is unique. That is why we offer a variety of formation packages designed to cater to your specific needs. Each package includes the essentials for successful UK company incorporation, such as:

  • Complete Electronic Incorporation Documents: All the necessary paperwork is conveniently delivered electronically.
  • Statutory Registers with Initial Entries: Streamlined company recordkeeping with pre-populated registers.
  • Effortless Compliance: Our Confirmation Statement Service ensures you meet your annual filing requirements.
  • HMRC Notification Made Easy: Receive a pro forma letter to notify HMRC of your company's dormant status.
  • Ongoing Support: Our friendly and professional team is always available to assist you throughout your company's lifecycle.

We also offer a dedicated Dormant Company Accounts Service, handling the preparation and filing process for you, typically within two working days for never-traded businesses.

For companies with previous trading activity transitioning to dormancy, the dormant account filing process may require an additional day. In such cases, we recommend contacting us 5-7 working days before the due date to ensure a smooth filing process.

While our core formation packages provide a solid foundation for those seeking a prestigious business image from the outset, we recommend the Fully Inclusive Company Registration Pack. This premium offering caters to professionals seeking a comprehensive solution to establish their limited company.

The Fully Inclusive Package goes beyond standard incorporation, granting your company a distinguished presence in Central London. You can project a professional image and enhance client confidence by utilising our prestigious City Road EC1 address for registered and service address purposes. This package is ideal for businesses aiming to make a strong first impression and establish a central London base.

Step 3: Secure Your Incorporation with a Simple Checkout

With your unique company name selected and the ideal formation package chosen, completing your incorporation is just a few clicks away. Our secure checkout process allows you to finalise your order quickly and efficiently.

You will receive a confirmation email and login credentials for your personalised Online Portal account after a successful payment. This dedicated portal acts as your company's management hub, granting you easy access to track the incorporation progress, access essential documents, and manage your company effectively after it's established. For your records, a receipted invoice will also be sent electronically.

Step 4: Streamlined Online Application

Now that you have secured your chosen company name and incorporation package, it is time to finalise the registration process through our user-friendly online application form. Designed for ease and efficiency, this step typically takes just 5 minutes to complete. Clear explanations accompany each section, ensuring a smooth navigation experience.

Should any questions arise during the process, do not hesitate to reach out to our friendly team. They are readily available to guide you through every step.

Here is a breakdown of the key information you will need to provide:

  • Primary Business Activity: Identify your company's core function(s) using the Standard Industrial Classification (SIC) codes. Dormant companies can utilise the dedicated SIC code 99999. For more information about SIC codes, see our post: What is a SIC code: How Do I find and Change it?
  • Company Appointments: Detail the individuals fulfilling key roles within your company, including directors, secretaries, shareholders, and anyone with significant control (PSCs). At a minimum, one director is required, but there is flexibility regarding the number appointed.
  • Share Capital: Specify the number of shares to be issued, who will receive them, their minimum value, and the associated shareholder rights. The minimum requirement is one shareholder holding at least one share.
  • People with Significant Control (PSCs): Indicate any individuals holding significant control over the company. In most cases, shareholders also fulfil this role. Our website provides comprehensive guidance to ensure accurate completion of this section.
  • Application Review and Submission: Once you have meticulously reviewed all entered information for accuracy, submit the application form. We will then seamlessly forward it to Companies House for processing.

Upon successful approval, Companies House will issue a Certificate of Incorporation, officially registering your company.

Step 5: Notifying HMRC of Dormant Status (Post-Incorporation)

While not technically part of the incorporation process, informing HMRC of your company's dormant status is a crucial post-registration step.

HMRC typically presumes newly formed companies are trading entities, expecting them to file Corporation Tax Returns and make any associated payments. Neglecting these requirements can lead to penalties.

To avoid such complications, you must notify HMRC of your company's dormant status within three months of incorporation. The simplest method involves sending a letter outlining the company's dormancy. This letter should include:

  • Company Name and Registration Number
  • Incorporation Date
  • Unique Taxpayer Reference (UTR) - HMRC will automatically mail this to your registered office within a couple of weeks of incorporation.

We can help you with this by providing a pro forma letter template that you can complete and submit directly to HMRC.

Maintaining Your Dormant Company

Here's a breakdown of key actions to ensure your company's continued dormant status:

  • Cease Business Activity: The company must refrain from any business activities, including buying/selling goods or generating income. If your company resumes trading, notify HMRC immediately to resume Corporation Tax filings and payments.

Companies House Filings (Contrary to Common Misconception): Dormant companies are not exempt from Companies House submissions. Here are the essential reporting obligations:

  • Annual Confirmation Statement Submission
  • Yearly Dormant Company Account Filings (details to follow)
  • Reporting any Company Changes (registered office, director details, share capital, PSCs)

Potential Penalties for Non-Compliance: Failure to comply with these requirements can lead to serious consequences, including:

  • Company Strike-off by Companies House
  • Company Fines
  • Director Prosecutions

Ongoing Company Obligations: Standard company regulations remain applicable to dormant companies. These include maintaining statutory registers (like the member register) and upholding a registered office address within the incorporation jurisdiction.

Dormant Status Confirmation for Other Bodies: Occasionally, you may need to verify your dormancy with other government entities. For instance, the Information Commissioner's Officer (ICO) might inquire about your trading status to determine data protection registration and fee requirements. In such cases, confirm your dormancy on the ICO website.

Keeping up your dormant company accounts

Even in a dormant state, your company is still obligated to submit accounts to Companies House. However, a simplified solution is available for companies that qualify as dormant according to their definition (no "significant accounting transactions" during the financial year). These simplified accounts are known as Dormant Company Accounts.

Dormant company accounts are streamlined versions of standard accounts, containing basic information about the company's share capital with minimal additional details. Filing these accounts does not inherently trigger dormancy status but rather serves as a permissible filing option for eligible companies to meet their annual accounts filing requirements.

Remember that we offer a dedicated Dormant Company Accounts Service that handles your preparation and filing process. This valuable service saves you a lot of time and helps your company remain compliant with its filing obligations until you are ready to start operating.

Further recommended reading:

Are you thinking of using a registered office address? Please read about the latest changes in our post: New 2024 Companies House Requirements for Registered Office Address.

Do you have a new business idea? Get helpful advice from our post: Goals, Plans, and Profits: Charting Your Course to Business Success.

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