Dormant Company

I have been self-employed for a few years and due to the success of my business, I am now considering incorporating so I can trade through a limited company.  I have used my current trading name since I first started and want to use the same name for my limited company.  Will I be able to do this and can I protect the business name?

1st January 2011

One way of protecting the name is to set up a dormant limited company, which you can trade through at a later date when you decide to incorporate your business.  Although you would not be using the company to run your business at first, it would still be subject to the same filing requirements with regard to an annual return and accounts, but would be classed as dormant if no trading transactions have taken place.

Simplified dormant company accounts must be submitted to Companies House each year using form AA02. HMRC should also be informed of the company's dormant status, using form CT41G (dormant company insert).

Once you decide to bring your business into the dormant company, all the assets and trade should be transferred in and Companies House and the Revenue must be notified of the change in status for the company. Form CT41G (new company details) should be completed and filed with the Revenue in order that notices to file corporation tax returns can be issued.

If at some point during the company's life trade ceases for any reason, the company may be put back into a dormant state to avoid the need for full accounts and tax returns to be submitted to the Revenue, however abbreviated accounts would still be required by Companies House.

It is important to remember that the timing of an incorporation, or indeed cessation of a business can be crucial from a tax point of view and therefore it is a good idea to seek professional advice before you stop or start trading, in order that it can be managed in the most tax efficient way.  If you would like to discuss this, please contact your local TaxAssist Accountant who will be happy to speak about the circumstances that may apply to your business.

By Jo Nockels

Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.

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