If your limited company has stopped trading, or you are about to stop, you have two main choices. You can close it for good by striking it off the register. Or you can keep it on the register but inactive, which is known as making it dormant. Both are common, both are legitimate, and the right answer depends on your plans and what the company still owns or owes.
In this guide we explain what each option means, what you still have to do, and how to decide between them.
Striking off means removing your company from the official register kept by Companies House, the government body that registers UK companies. Once the company is struck off and dissolved, it no longer exists as a legal entity.
For a solvent company that has simply come to the end of its useful life, directors usually apply for a voluntary strike-off. You do this by filing a form called DS01 with Companies House and paying a small fee. It is a relatively simple and low-cost way to close a company that has no debts it cannot pay.
Companies House will only accept a voluntary strike-off if the company meets certain conditions. In broad terms, in the last three months the company must not have:
You also need to tell everyone with an interest in the company that you have applied. That includes shareholders, employees, creditors, any directors who did not sign the form, and any pension scheme managers or trustees. You must send them a copy of the application within a short time of filing it.
Companies House publishes a notice in The Gazette, the official public record. This gives anyone who objects, such as a creditor who is still owed money, a chance to say so. If nobody objects during the notice period, which is usually around two months, the company is struck off and dissolved.
Heads up - anything the company still owns when it is dissolved, including money left in its bank account, passes to the Crown. Make sure you have dealt with all assets and paid out any remaining funds properly before the company is dissolved.
A dormant company stays on the Companies House register but is not doing any business. It still exists as a legal entity, still has at least one director, and can start trading again whenever you are ready.
It helps to know that Companies House and HMRC look at dormancy in slightly different ways.
For Companies House, a company is dormant if it has had no significant accounting transactions during the year. Some small payments, such as the fees you pay to Companies House itself, do not count. But receiving income, paying expenses or buying things generally would.
For Corporation Tax, which is the tax limited companies pay on their profits, HMRC treats a company as dormant if it is not trading and has no other income, such as bank interest or investment income. You should tell HMRC when your company becomes dormant. HMRC may then not expect a Corporation Tax return each year, unless it sends you a notice asking for one. If it does, you still need to file.
Dormant does not mean forgotten. A dormant company still has legal duties, and the directors are responsible for them. Each year you will need to:
If you miss Companies House filings, you can face late filing penalties. And if filings are missed for long enough, Companies House may start to strike the company off itself, which is known as compulsory strike-off.
A dormant company is paused, not closed. It keeps its name and its legal existence, but it also keeps its filing duties.
| Question | Striking off | Dormant |
|---|---|---|
| Does the company still exist? | No, once dissolved | Yes, it stays on the register |
| Ongoing annual filings | None after dissolution | Annual accounts and confirmation statement |
| Ongoing costs | A one-off application fee | Annual confirmation statement fee, plus any accountancy or registered office costs |
| Can you trade again? | Only by restoring it or setting up a new company | Yes, by telling HMRC and restarting |
| Company name | Becomes available for others to use | Stays protected |
| Assets left in the company | Pass to the Crown on dissolution | Stay owned by the company |
| Best suited to | Solvent companies you are sure you no longer need | Companies you may use again, or that need to hold their name |
Striking off is often the better choice if:
For many one-person companies, such as contractors who have taken a permanent job or retired, a clean strike-off is the simplest and cheapest route.
Making the company dormant can suit you better if:
The trade-off is that you keep paying the running costs and keep meeting the filing duties every year.
Before you apply to strike off, it is important to tidy up the company's tax affairs. This usually means:
Good to know - if your company has a significant amount of money or assets left, a formal process called a members' voluntary liquidation (MVL) may be more suitable than a strike-off. A licensed insolvency practitioner handles it. It costs more, but it can give you more certainty on how the money you take out is taxed. Anti-avoidance rules may also apply if you close a company and then carry on a similar trade soon afterwards, so it is worth taking advice.
Yes, in both cases, though one is much easier than the other.
A dormant company can start trading again at any time. You need to tell HMRC that the company has become active, usually within three months of starting to trade, and then meet the normal tax and filing duties again.
A struck-off company can sometimes be brought back onto the register, which is called restoration. This can be done through Companies House in some cases, or through the court in others, and there are time limits. Restoration can be slow and can cost more than simply keeping the company dormant would have done. So if you think there is a real chance you will need the company again, dormancy is usually the safer choice.
If you are sure you are finished with your company, it has no debts and you have dealt with its assets, striking it off is usually the simplest way to close the door. If you think you might need the company again, or you want to protect its name, making it dormant keeps your options open for a modest yearly cost.
Whichever route you choose, getting the final tax and filing steps right will save you trouble later. If you are unsure, speak to your accountant before you file anything. And if you are keeping a dormant company going, we can help you stay on top of its accounts and deadlines each year.