Is your dormant company still worth keeping? 

You've got two tabs open.

One is the Companies House login for the company you haven't touched in years, the other is a blank DS01 form. You haven't decided which one you're going to use yet.

A dormant company is one that Companies House and HMRC both leave largely alone, though they measure that idleness differently.

Companies House watches the money.

If nothing has gone in or out beyond the value of the shares taken up at incorporation, or the fees and penalties Companies House itself charges, the company counts as dormant on its books.

HMRC watches the trading.

Buying, selling, renting property, advertising, hiring someone, even picking up a few pounds in bank interest: any of it and the company's active for Corporation Tax. The two tests run on separate tracks, so a company can be dormant for one and still need sorting out with the other.

Staying dormant doesn't mean stepping away from the paperwork completely.

Companies House still expects a confirmation statement every year, confirming your details are correct and that your directors have verified their identity.

You also need to file dormant accounts within nine months of your accounting year end.

If you never traded at all, form AA02 does the job. If you traded before going quiet, and you're into small company or micro-entity accounts instead, just without a profit and loss account for the dormant year.

Either way, the confirmation statement itself doesn't change, since it checks your company details, not what the company has been doing.

Miss a filing deadline and the penalties climb fast: £150 if your accounts are up to a month late, rising to £1,500 past six months, doubling again if you're late two years running.

Leave both filings unattended for long enough and Companies House will strike the company off anyway, just without you choosing the timing.

Once you tell HMRC once that the company's dormant, Corporation Tax returns stop landing in your inbox until you start trading again. From that point you've got three months to tell them you're active.

A newly incorporated company that hasn't started trading counts as dormant from day one, so if you registered a name ahead of launching, you may already be in this position without having done anything about it.

Keeping a company dormant only makes sense when there's a reasonable chance you'll use it again.

Some directors register a company months before they're ready to trade, just to hold a name before someone else takes it.

Others let a dormant company sit quietly on a trademark or a domain, while the working half of the business runs through something else.

A career break, an illness, or time away from the business for any other reason is another common trigger for putting a company to sleep. Trading picks back up once things settle. None of these need a fixed end date.

A company can stay dormant indefinitely, as long as someone keeps filing the confirmation statement and the accounts turning up on time.

If there's a real chance you'll bring the company back to trading, it helps to have an account ready before that day arrives. Opening a GBP and EUR business account with Ampere only takes five steps, done entirely online, and your company isn't stuck waiting on paperwork once it's ready to trade again.

When to close a dormant company for good?

Once there's no real prospect of using it again, the yearly filings stop buying you anything.

Closing a limited company in the UK usually means applying to strike it off the register using form DS01. A dormant company is normally well placed to do this, since striking off comes with its own conditions:

• no trading or sale of stock in the last three months
• no name change in that time
• no threat of liquidation
• no arrangement with creditors

If the company can't meet these conditions, the strike-off isn’t available. Most often because the company still owes money it can't pay, in which case a formal liquidation is needed instead, on a different process and a different cost entirely.

Assuming the company qualifies, the DS01 costs £13 to file online or £18 by post , needs signatures from a majority of directors, and within seven days of sending it you need to send a copy to anyone who could be affected, including shareholders, creditors, employees, and the trustees of any staff pension fund.

Companies House then publishes a notice in the Gazette, and if nobody objects within two months, a second notice follows and the company stops existing.

Before you apply, deal with anything still sitting inside the company.

Bank accounts need closing beforehand, because once the company is struck off you lose access and would have to restore the company to get back in.

The same goes for domain names, leftover cash, anything of value. Whatever's left when the company disappears passes to the Crown by default.

If you're distributing money to shareholders first and the total comes to £25,000 or less, it can usually be treated as capital, which is taxed differently from income. Above that, or if there's meaningfully more sitting in the company, an accountant can talk you through the cleanest way to take it out before you file anything.

The decision mostly comes down to whether the company still has a job to do.

If there's a genuine chance you'll trade through it again, want to hold onto the name, or need somewhere to keep an asset, dormant status keeps that door open for the price of two small filings a year.

If none of that applies, closing it down properly ends the yearly admin for good.