How to make a limited company dormant: a step-by-step checklist

1. Decide whether dormant or closing is right

Making a company dormant keeps it on the Companies House register without trading. GOV.UK says you can keep a limited company dormant for as long as you want, but it must still send annual accounts and a confirmation statement every year.

Dormancy suits a company you expect to use again. If you have no plans for it, closing it may be simpler than years of annual filings. Our guide on how to close a limited company compares striking off with liquidation.

Source: Closing a limited company

2. Finish trading

Bring the business to a clean stop. Send your last invoices and collect what customers owe. Pay suppliers, end contracts and cancel subscriptions, direct debits and standing orders that would otherwise keep running.

Remember that Companies House judges dormancy across a whole financial year. A year in which the company traded for even part of the time contains significant accounting transactions, so it normally needs ordinary accounts, not dormant accounts. The first dormant accounts are usually for the first full financial year with no significant accounting transactions.

Source: Companies Act 2006, section 1169: dormant companies

3. Stop transactions in the bank account

A company can keep its bank account while dormant, but the account must stay quiet. Companies House ignores only Companies House filing fees, late accounts penalties and money paid for shares on incorporation. Monthly fees and interest are not on that list, and GOV.UK counts getting interest as trading for Corporation Tax.

Ask the bank whether the account will charge fees or pay interest, and check for any payment a director makes personally on the company's behalf. Our guide to dormant company bank charges explains how a small charge can change the accounts route.

Source: Dormant for Companies House

4. Tell HMRC the company is dormant for Corporation Tax

Once the company has stopped trading and has no other income, you can tell HMRC it is dormant for Corporation Tax. HMRC's online service asks for the company name, its 10-digit Unique Taxpayer Reference (UTR) and the date the company stopped trading. You can also tell HMRC by phone or by post, and an agent with an agent code can do it for you.

After that, GOV.UK says the company will not have to file another Company Tax Return unless HMRC asks it to or it begins trading again. A notice to deliver a return that HMRC has already sent still needs a return filed online, which shows the company was dormant for that period.

Telling HMRC does not tell Companies House. You can tell HMRC your company is dormant through us, or use HMRC's own service.

Source: Tell HMRC your company is dormant for Corporation Tax

5. Deal with VAT: deregister or file nil returns

If the company is VAT registered, GOV.UK gives two routes. If you do not intend to trade again, you must deregister for VAT within 30 days of the company becoming dormant. If you plan to restart trading, you must send 'nil' (empty) VAT returns while the company is dormant.

GOV.UK's VAT cancellation page says you might be charged a penalty if you do not cancel within 30 days of stopping being eligible. You can usually cancel online if you have stopped trading and are not part of a VAT group. Our guide on how to cancel your VAT registration covers the final VAT return.

Source: Dormant for Corporation Tax

6. Close the PAYE scheme if no one will be paid

If the company has a PAYE scheme, GOV.UK says you should close it if you do not plan to restart trading in this tax year. That includes a scheme used only to pay a director's salary. Simply stopping payments does not close it.

To close the scheme, send a final Full Payment Submission (FPS) or Employer Payment Summary (EPS). Tick 'Final submission because scheme ceased' and enter the date the scheme closed. Pay any tax and National Insurance still due and give each employee a P45. If you stop paying staff for less than a whole tax year, the scheme continues instead. Read how to close a PAYE scheme for the full steps.

Source: Stop being an employer

7. Keep filing with Companies House every year

A dormant company still files with Companies House. Every company, including dormant and non-trading companies, must file a confirmation statement at least once a year. The Companies House fee is £50 online with the first statement in each 12-month payment period.

The company must also file annual accounts for every financial year. For a year with no significant accounting transactions, a small company can file dormant accounts instead of full accounts. Check the accounts deadline shown on the Companies House register each year.

Source: Filing your company's confirmation statement

8. Restarting later: tell HMRC within 3 months

If the company starts doing business again, register it for Corporation Tax again. HMRC's guidance says to tell it within 3 months of the start of the company's tax accounting period, which begins when business restarts. Companies House needs no separate notice: the next non-dormant accounts show the change.

Source: Corporation Tax: trading and non-trading

What to tell each body when a company goes dormant

Each body is handled separately. Finishing one step does not update the others.

Source: Dormant for Corporation Tax