You may have opened your limited company for one of many reasons, but sometimes you may wish to stop operating under a limited company for a period of time. This can be for many reasons, maybe a return to PAYE work or a break from work all together. For whatever reason is it important to know how to make your company dormant properly.
WHAT IS A DORMANT COMPANY?
A dormant company is a company that is registered with Companies House but is not currently trading or receiving any income. You can choose to make your company dormant as soon as you register it or once its been trading for a while. If a dormant company does any kind of trading activity or generates any income it will instantly become active again.
WHY SHOULD I MAKE MY COMPANY DORMANT?
There are many reasons you might want to make your company dormant. You may have a specific company name in mind for future projects that you want to secure but have no plans on beginning the project just yet. You may have been trading through your company but want to take a break, but plan on returning to it at later date.
HOW DO I MAKE MY COMPANY DORMANT?
There are a few steps to make your company dormat.
- Contact HMRC’s corporation tax office in writing with the date from which your company will be inactive.
- HMRC will then ask for a Corporation Tax Return if your company was active.
- Any outstanding corporation tax will also need to be paid.
Before your company is declared dormant, you will need to close your payroll and ensure all outstanding bills are paid. If the company is owed money from clients, this should also be settled.
WHAT ARE MY OBLIGATIONS ONCE I MAKE MY COMPANY DORMANT?
There is no time limit on making your company dormant but once your limited company has been registered, there are certain obligations which you must fulfil.
You will still need to file annual accounts with Companies House and your confirmation statement. This statement will outline all of your key company dates including director details and information about any shares issued.
Once your company is registered dormant, you cannot have paid employees. Similarly, you cannot pay dividends to shareholders without making the company active again.