Making your UK limited company dormant — the compliance checklist founders miss

We hear one phrase at Filing HQ almost weekly: "I'll just make the company dormant for a bit." It usually comes from a founder whose side hustle has cooled off, whose contract has ended, or whose new venture is on pause. The instinct is sound — pausing a limited company is easier than winding it up. But "going dormant" is not a single button on a government website, and every month we help founders who assumed it was.

The awkward truth: a dormant UK limited company is still a fully live legal entity. It still has a registered office, directors, a confirmation statement deadline, and an annual accounts deadline. The only thing that changes is whether money moves through it — and that distinction is policed separately by HMRC and Companies House, who use slightly different definitions of "dormant" and will penalise you if you satisfy one but not the other.

This is the no-drama guide to doing it properly.

What "dormant" actually means — and why there are two definitions

"Dormant" looks simple and then turns out to mean two different things depending on who is asking. You must satisfy both definitions, or you are not really dormant — you are a company that has stopped trading and is quietly building up a problem.

Dormant for Companies House (accounts). Companies House uses the Companies Act definition: a company is dormant if it has had no "significant accounting transactions" during the financial year. Only a narrow list is ignored — payment of shares taken by subscribers to the memorandum, fees paid to Companies House for name changes or re-registration, and civil penalties for late accounts. Almost everything else counts, including bank charges, interest credits, and supplier payments. Even a single small transaction can break dormancy.

Dormant for HMRC (Corporation Tax). HMRC treats a company as dormant when it has no income or expenditure at all during a period. No invoices issued. No sales. No interest on the business bank account. No paying suppliers, not even your own accountant. The moment a single pound moves, the company is "active" again and HMRC expects a Corporation Tax return (CT600) covering that period. You must also notify HMRC in writing (or via their online form) that the company is dormant for Corporation Tax — they will not assume it.

HMRC's bar is slightly higher than Companies House's — a stray £0.04 of bank interest will usually flip you out of HMRC-dormant status but may not break Companies House dormancy. Founders who understand only one of the two definitions often trip the other without realising.

Why founders go dormant in the first place

Closing a limited company properly takes time and costs money. Making it dormant preserves a named entity, a Companies House number, a bank account, a brand, and a trading history. Four reasons recur:

• Contract pipeline has gone quiet. The consultancy work dried up for a quarter; you expect it back but don't want to bleed fees meanwhile.
• You pivoted to a new venture. The old Ltd still has a name and history you may want to pick up later — or sell.
• You're protecting a brand or trademark. The company holds a domain, a social handle, or IP you don't want a competitor scraping up.
• You incorporated too early. You registered before you were ready to trade and want to keep the name on ice until launch.

All four are legitimate. None remove your obligation to file on time. A dormant company that misses deadlines looks identical to Companies House as an abandoned one, and the strike-off process does not care about your intentions.

The dormant-company compliance checklist

Whatever the reason, the steps to a properly dormant UK limited company are the same. Work through them in order — skipping any one is how founders end up with frozen bank accounts, HMRC determinations, or strike-off notices.

1. Stop all trading activity cleanly. Invoice out every outstanding job, pay every outstanding supplier, cancel company-billed subscriptions, and review direct debits. Aim for a financial year in which nothing moves.
2. Close or ring-fence the business bank account. Even pennies of bank interest can break HMRC-dormant status. Close the account, or move to a zero-interest product and confirm in writing that no fees, interest, or reward credits will be applied.
3. Notify HMRC that the company is dormant for Corporation Tax. Most founders skip this step. Write to HMRC's Corporation Tax office (or use their online form) stating the date dormancy began. Until you do, HMRC will keep issuing CT600 reminders and can raise a determination estimating tax owed, plus penalties.
4. Deregister for VAT if you were registered. A dormant company with no taxable supplies should not remain on the VAT register. Submit form VAT 7 to cancel.
5. Close your PAYE scheme if no one is being paid. If your only employee was you and salary payments have stopped, close the PAYE scheme with HMRC — otherwise the company will keep being flagged for missing RTI submissions.
6. Maintain a live, monitored registered office. This is non-negotiable. Companies House will keep writing — reminders, verification notices, compliance letters. Use a proper registered office address that actions its post; an old flat or a cancelled accountant's address is a ticking strike-off clock.
7. File the annual confirmation statement (CS01). Dormancy does not remove this requirement. The online fee is currently £50 and the 14-day filing window is as unforgiving as ever.
8. File dormant company accounts every year. Submit form AA02 if the company has been dormant since incorporation (a handful of figures). If the company has previously traded, file abridged or micro-entity accounts showing no transactions.
9. Maintain statutory registers. Keep the registers of members, directors, PSCs, and secretaries (where appointed) up to date at the registered office or SAIL. Dormant companies must still record share transfers, director changes, and PSC updates — and make them available on request.
10. Keep director and PSC identity verification current. Since 18 November 2025, identity verification is mandatory for directors and people with significant control under ECCTA — dormant companies are not exempt. Any new director appointment or PSC change still triggers the usual identity verification requirements.

Common mistakes with dormant companies

Founders rarely torpedo their own dormancy on purpose. It happens because the definitions are narrow and modern life is full of small automatic transactions. Watch for these:

• Bank fees, interest, or cashback. Even £0.12 of interest — or a monthly account fee — is a "significant accounting transaction." Close the account or move to a zero-fee, zero-interest product and confirm in writing.
• Forgotten software subscriptions. An accounting app, domain renewal, or Google Workspace seat billed to the company counts as expenditure. Cancel, or move billing to a personal card and record it cleanly in a director's loan account if it genuinely relates to the company.
• Paying professionals from the business account. Paying an accountant or agent from the dormant company's account is itself a transaction that breaks HMRC dormancy. Settle professional fees personally or from another entity.
• Late payments from old clients. A client finally paying an old invoice during the dormant period is a receipt that breaks dormancy. Be ready to report the company as active for that period.
• Forgetting to notify HMRC. Many founders stop trading and assume HMRC knows. It doesn't. Without written notification, HMRC continues to expect a CT600 and can issue a determination with penalties.
• Dividends, share issues, or restructures. Paying a dividend, issuing new shares, or executing a share transfer for consideration all count as significant activity. Dormant companies should stay still, not restructure.

Dormant vs closed — when pausing is the wrong answer

Dormancy is not free. Between the confirmation statement fee, your registered office, and the time cost of filing dormant accounts on time, you are looking at a meaningful annual cost for a company that does nothing. Three honest questions help decide whether dormancy is the right call:

1. Do you have a concrete plan to trade through this entity again within 24 months? If the answer is "maybe one day", you are usually better off striking it off and forming a fresh company when you're ready.
2. Is the brand, domain, or Companies House number genuinely valuable? For some founders it is — particularly where trading history matters to a bank or client. For most side-hustle Ltds, it is not.
3. Are there outstanding creditors, HMRC debts, or director's loan balances? Dormancy does not erase these. If the company has liabilities, speak to an accountant before deciding to pause or close.

If the honest answer to the first question is "no", and the second is "not really", voluntary strike-off via form DS01 is usually cleaner — as long as the company has no debts, has not traded in the last three months, and has no ongoing legal proceedings.

Coming back from dormant — what to expect

Resuming trade is easier than going dormant. The moment you invoice a client, open a new bank account, or take your first payment, the company is active again. You must then:

• Notify HMRC that the company is no longer dormant for Corporation Tax, and register for CT accounting within three months of starting to trade.
• Re-register for VAT if turnover will exceed the threshold, or voluntarily below it.
• Restart PAYE if you're taking a salary again.
• File full company accounts for the next financial year rather than AA02 dormant accounts.
• Refresh SIC codes at the next confirmation statement if the nature of the business has changed — and file any director or PSC changes as they happen, not later.

Keeping the company compliant while dormant means you don't need to explain a gap to banks, landlords, or insurance underwriters. A clean dormant period looks clean. A messy one looks like risk.

The Filing HQ way

Filing HQ exists for exactly this kind of quiet-but-costly compliance work. Dormant filings are simple on paper, but the penalty for forgetting one is wildly disproportionate to the effort saved. Our annual packages bundle registered office, confirmation statement filing, dormant accounts support, and PSC and identity verification support — so a paused company stays paused, not accidentally struck off. Don't let a £50 filing turn into a £341 restoration bill.