What Is a Dormant Company?
A dormant company is one that has had no significant accounting transactions during its financial year. This means no money has gone in or out of the company, apart from shares taken on incorporation and the annual Companies House filing fee.
Companies House and HMRC have slightly different definitions of dormancy. For Companies House purposes, a company is dormant if it has had no significant accounting transactions. For HMRC, a company is dormant if it is not active for Corporation Tax purposes, meaning it has no income, no chargeable gains, and is not carrying on a business.
There are several common reasons for keeping a dormant company. You might be protecting a company name for future use, holding the company in reserve before starting to trade, pausing a seasonal business, or using it as a holding vehicle. Whatever the reason, the company still has legal obligations.