UK company law defined a limited company as a dormant if it has no significant business accounting transactions during its accounting period. Therefore, if your limited company merely has the following transactions then it is classified as a dormant company.
- Monies received from shareholders. For instance, the shares issued to them as per the company memorandum of association.
- Statutory fees paid to Companies House. For examples, filing of Confirmation statement, company name change and re-registration of your company.
- Late filing penalty payment made to the Registrar of Companies.
Dormant company accounts
Generally, your company is considered dormant if your limited company is registered with no intention to carry out business since its incorporation. In this case, you are eligible to file a dormant account with Companies House. Broadly, you are required to submit your dormant account to Companies House within nine months after your accounting year ended. the dormant account can be filed on the same day as your company account year-end date.
You may submit your dormant account online or on paper. For online filing, you would require your authentication code. You may request your code with Companies House again if you have misplaced your original code. Companies House will send the code to your company registered office address within 5 working days.
On the other hands, if your limited company have any other transactions during its accounting year, you are not eligible to file dormant account. even if your company has not yet started generating income.
Late filing penalty
Companies House will issue late filing penalty if your dormant company account is filed account late. Even if it is just late by one day.
The penalty starts from £150 to £1500. If your dormant company is registered as a public limited company then your penalty starts from £750 to £7500 depending on how late.
However, you may appeal to the late filing penalty if your reasons for the lateness is exceptional. In that case, Companies House may waive the penalty if your situation is really exceptional. For instance, Royal Mail has postal strike unannounced cause your accounts to arrive Companies House late.
Another important document to file with Companies House for your dormant company is the Confirmation statement. You use the SIC code 99999 for a dormant company.
At the same time, you confirm your company information is still valid. You must notify Companies House of that outdated information and supply the most recent ones.
For example, you appointed a new director or that your company secretary has resigned. You submit the form AP01 and TM02 to Companies House respectively. You must also disclose who is the person with significant control in your company. Anyone has influenced your company operations or own 75% of the shares is a PSC. In this case, you use the form PSC01.
Likewise, you may file your confirmation statement online or on paper too.
Companies House normally send reminders to your registered office when your confirmation statement is due. You must act promptly.
However, if you are no longer able to access mails sent to your registered office, you must change it. Correspondingly, you notify Companies House with your new address using the form AD01. Remember? Companies House also send your authentication code to your registered office. You require this code for online filing as discussed above. For this reason, you must give Companies House a valid registered office address as soon as possible.
Otherwise, Companies House will dissolve your company if you did not respond to them. And, your letters were returned to sender many times.
Why set up a dormant company?
You may be wondering why people want to set up a company and not use it for business? Many entrepreneurs register a dormant limited company to keep it for the future business venture. Another common reason to register a dormant company is to protect existing business names, to avoid competitors registered similar company names to the business to confuse customers.