Dormant company

A company is dormant, in the Companies House sense, if it has had no “significant accounting transactions” in a period — essentially, nothing that has to be entered in its accounting records beyond a few permitted items such as the fees paid to Companies House. Being dormant is a legitimate and common state, not a sign of failure.

Companies are kept dormant for many practical reasons: to reserve a company name, to hold an asset such as a property or a trademark, to sit ready for a future venture, or to keep a formerly trading company on the register without activity. A dormant company still exists and is still active on the register — dormant describes its trading activity, not its legal status.

Dormant companies file simpler dormant accounts and still must file a confirmation statement each year. If they begin trading, they must tell HMRC and start filing full accounts.

Example

A business owner might incorporate “Future Brand Ltd” and keep it dormant for two years purely to secure the name and be ready to launch, filing dormant accounts in the meantime.

On Company Shark

Because dormant companies rarely make good sales prospects, understanding dormancy helps you refine target lists — and our guides explain how to spot the difference between a dormant shell and a genuinely trading business.

Related

• Company status
• Dissolved company
• Confirmation statement
• Guide: What is a dormant company?