{"id":11314,"date":"2024-01-13T16:30:40","date_gmt":"2024-01-13T16:30:40","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=11314"},"modified":"2024-07-18T10:50:15","modified_gmt":"2024-07-18T09:50:15","slug":"set-up-dormant-company","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/set-up-dormant-company\/","title":{"rendered":"How to set up a dormant company"},"content":{"rendered":"
A dormant company is a company that is not taking part in any trading activity and has no form of income. A previously trading company can become dormant or a company can be set up as dormant. In this post, we will focus on the latter and show you how to set up a dormant limited company, and then what you need to do to maintain dormant status.<\/span><\/p>\n There are two main reasons why you may wish to set up a dormant company:<\/span><\/b><\/p>\n The process for setting up a dormant company is the same as setting up a company that will be trading, barring one detail regarding SIC codes, which we\u2019ll cover below.\u00a0<\/span><\/p>\n With <\/span>Quality Company Formations<\/span><\/a>, you can set up a dormant company in a few simple steps:<\/span><\/b><\/p>\n Your company needs a name, even if you have no plans to trade yet. This must be unique, can\u2019t be too similar to another currently on the register, shouldn\u2019t be offensive, and must end with \u2018Limited or \u2018Ltd\u2019.\u00a0<\/span><\/p>\n How to get a replacement certificate of incorporation<\/span><\/a>\n What happens if you don’t file a confirmation statement?<\/span><\/a>\n Preparing annual accounts for your limited company<\/span><\/a>\n <\/p>\n Moreover, Companies House maintains a list of <\/span>sensitive words and expressions<\/span><\/a>. If any of these are included within your company name, you must seek written approval from a specific body (depending on the word or expression) to use the name to accompany your application. For example:\u00a0<\/span><\/p>\n You can check the availability of your proposed company name (or find out if it includes any sensitive words and expressions) with <\/span>our name search tool<\/span><\/a>.<\/span><\/b><\/p>\n We offer several company formation packages dedicated to registering a private company limited by shares (the most popular form of company in the UK):<\/span><\/p>\n At the checkout, you will have a chance to add some additional extras to your order that were not included in your package. For example, if you want your company formed on the same day, you can select our Guaranteed Same Day Service. Or, if you want to ensure your company is fully compliant with GDPR, you could add the GDPR Compliance Package.<\/span><\/p>\n When you\u2019re ready, you need to provide us with your email address, password for your account, and billing details. You can then proceed to make payment (we accept the majority of payment cards).<\/span><\/b><\/p>\n We will then guide you through the online process of setting up a dormant company. This includes providing the following information:<\/span><\/p>\n The SIC Code is used to notify the government of the types of businesses that are being incorporated. We will provide you with a list of codes, and all you need to do is select one to four codes that are appropriate for your company.\u00a0<\/span><\/p>\n As a non-trading company, you should select \u201899999\u2019 – the dedicated code for dormant companies. You can then add up to three more codes if you want.<\/span><\/p>\n All companies must provide a UK-based registered office address<\/a>. This is the company\u2019s official address – although, no trading activity needs to take place at the address – and where government bodies such as HMRC, Companies House, and the Information Commissioner\u2019s Office (not an exhaustive list) will send their correspondence.\u00a0<\/span><\/p>\n Using a residential address as a registered office address is allowed (if the landlord grants permission). However, this is not recommended, as the address is placed on the Companies House public register, which makes you vulnerable to unwanted visitors and potential fraudulent activity.<\/span><\/p>\n A non-residential address is the best choice. With the exception of PO Boxes, you can use any type of non-residential address postal address that satisfies the new ‘appropriate address’ rules in the Companies Act 2006<\/a>.<\/p>\n A number of our packages include the option to use our central London address as a registered office address. If the package you purchased did not include this facility, you will have the option to add the service during the company formation process.<\/span><\/p>\n Directors take care of the running of a company. You can set up a dormant company with one director or multiple directors – it\u2019s up to you. For every director that you appoint, you must enter their:<\/span><\/p>\n Shareholders own the company. You can set up a dormant company with one shareholder or multiple shareholders. Shareholders can also be directors. For every shareholder that you name, you must enter their:<\/span><\/p>\n The share split in the company defines the percentage that they own. For example, if naming only one shareholder, they will own 100% of the company, regardless of the number of shares you allocate to them. If naming two shareholders, provided that they both have the same number of shares, they will own 50% of the company each.<\/span><\/p>\n As the owners of the company, shareholders are the people who are financially liable if the company accrues debt. However, this liability is limited to the unpaid nominal value of the shares that they hold. Because of this, we recommend allocating a low number of shares with a low value, such as one share worth \u00a31.<\/span><\/p>\n If you have multiple shareholders with differing levels of ownership, allocate a low amount of shares with a low value, whilst still representing the split. For example, if you want a 75% \/ 25% split, allocate three shares to shareholder A and one share to shareholder B.<\/span><\/p>\n PSCs are the people who have ultimate power within the company. They are typically also shareholders within the company. To set up a dormant company, you generally need to name at least one PSC. For every PSC, you must enter their:<\/span><\/p>\n The articles of association is an internal document that sets out how the company is going to be run. We have prepared a set of articles of association that are appropriate for dormant companies, so you don\u2019t need to do anything regarding this.<\/span><\/p>\n <\/b>Once you have provided all of the necessary company information, you simply need to review the company details, checking for any mistakes. When you are happy, you can submit the application.\u00a0<\/span><\/p>\n All of our company formation packages include a Free Pre-Submission Review. This means our team of experts will also review your application before it\u2019s sent for processing at Companies House. If our team sees any errors, they will work with you to fix them. If there are no problems, the application will then go to Companies House.<\/span><\/p>\n Your dormant company will typically be set up within 24 hours. As soon as it has been registered, we will send you an email containing your key company information, including your company registration number, company authentication code, digital certificate of incorporation, and digital share certificates.<\/span><\/b><\/p>\n Your company will now have been set up, but a vital step of the process is notifying <\/span>HMRC<\/span><\/a> that it is dormant. Failure to do this will result in HMRC assuming that your company must file a Company Tax Return and pay Corporation Tax.<\/span><\/p>\n Within a few weeks of your company being formed, <\/span>HMRC will send a letter<\/span><\/a> to your registered office that includes your Unique Taxpayer Reference (UTR). Once you have received this letter, you should let HMRC know that your company is dormant for Corporation Tax through <\/span>this online form<\/span><\/a>.\u00a0<\/span><\/p>\n It is also a good idea to let the Information Commissioner\u2019s Office (ICO) know your company is dormant through <\/span>this online form<\/span><\/a>. This should stop the ICO from chasing you up regarding registering with them.<\/span><\/p>\n Once you have followed these steps, you will have set up your dormant company.<\/span><\/p>\n Maintaining dormant status is an ongoing process. To do this, you must first ensure your company doesn\u2019t partake in any trading activity. After this, you must:<\/span><\/p>\n File an annual confirmation statement<\/b> – This is a report made up of basic company information. This is due approximately two weeks after the anniversary of your company\u2019s incorporation, and then must continue to be delivered on an annual basis, regardless of whether your company is trading or not.\u00a0<\/span><\/p>\n As mentioned, a number of our company formation packages come with the facility to have us file your confirmation statement for you. <\/span>This service can also be purchased separately<\/span><\/a>.<\/span><\/p>\n File dormant company accounts – <\/b>All companies (regardless of trading activity) must file annual accounts, with the first set needing to be delivered 21 months after incorporation. Subsequent accounts should then be delivered 9 months from the <\/span>accounting reference date<\/span><\/a>.<\/span><\/p>\n Dormant companies can file a specialist set of accounts known as Dormant Company Accounts. Whilst not included as part of any of our company formation packages, you can purchase our <\/span>Dormant Company Accounts Service<\/span><\/a> separately as and when you need to file them.<\/span><\/p>\nWhy set up a dormant company?<\/h3>\n
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Setting up a dormant company<\/h3>\n
1. Choose your company name<\/h4>\n
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2. Pick your company formation package<\/h4>\n
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3. Select your extras and make payment<\/h4>\n
4. Provide your company information<\/h4>\n
Standard Industrial Classification (SIC) Code<\/strong><\/h5>\n
Registered Office Address<\/strong><\/h5>\n
Director details<\/strong><\/h5>\n
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Shareholder and share information<\/strong><\/h5>\n
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Person with significant control (PSC) details<\/strong><\/h5>\n
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The articles of association<\/strong><\/h5>\n
Review your information<\/strong><\/h5>\n
5. Let HMRC know that the company is dormant<\/b><\/h4>\n
How to maintain your dormant status<\/h3>\n
If your company starts trading<\/h3>\n