As per Her Majesty's Revenue and Customs (HMRC) guidelines, a company is classified as dormant under the following circumstances:
- It has ceased trading and generates no other income, such as from investments.
- It is a newly incorporated limited company that has not commenced trading.
- It is an unincorporated association or club with a Corporation Tax liability of less than £100.
- It is a flat management company.
Trading activities encompass buying, selling, renting property, advertising, employing individuals, or earning interest. In such cases, it's necessary to notify HMRC of your company's dormant status.
Despite being dormant, HMRC might still require you to submit your Company Tax Return.
Furthermore, if your company is registered for VAT and you have no intention of trading again, you must deregister for VAT within 30 days of dormancy. However, if you plan to resume trading, you should submit 'nil' (empty) VAT returns during the dormant period.
If your company employs individuals and you do not intend to resume trading within the current tax year, it's advisable to close your PAYE scheme.
For further information, refer to the following links:
- Inform HMRC of your company's dormancy for Corporation Tax
- Notify HMRC when restarting trading for a non-trading or dormant company
Additionally, concerning Companies House requirements:
- Even if your limited company is dormant for Corporation Tax or according to Companies House, you must still submit your confirmation statement and annual accounts.
- Companies House considers a company dormant if it has had no 'significant' transactions in the financial year. Notable transactions exclude filing fees, penalties for late filing, or share capital payments upon incorporation.
- There is no need to notify Companies House when resuming trading. Your next set of accounts, which are not classified as dormant, will indicate the company's active status.
For further information : Companies House Guidance