As a limited company owner, you may find yourself in a situation where you are forced to cease trading. Whatever the situation, after an extended period, you could invariably find yourself in a position where it’s financially and logistically feasible to restart it.

If a company has been dormant for some time, there is a process for reestablishing it for trading once again. Bringing a dormant company back to life can be a viable option for many business owners, but regulatory or market shifts, new consumer buying behaviours, and evolving economic conditions can all influence how successful that endeavour is.

At Hamlyns, we understand the complexities involved in this process and are here to guide you through each step. This comprehensive guide will walk you through the process of reactivating a dormant company in the UK, covering all the essential legal and financial steps.

What is a Dormant or Non-Trading Company?

A dormant or non-trading limited company is one that has no significant financial transactions during a particular accounting period. Essentially, it exists on paper but remains inactive in terms of business activities, meaning that sales, purchases, or other activities that would normally be reflected in financial statements are not recorded.

Even when dormant, companies still have legal obligations, such as filing annual returns and accounts with Companies House. However, they are not taking in or spending money on business activities.

Steps to Restart a Dormant Company

1. Evaluate Your Decision

Before proceeding, it’s important to consider whether restarting a UK limited company is the best way forward. Carefully evaluate the benefits of forming a new company versus those of restarting a previous one.

The benefits of restarting a dormant company are that you retain the company’s reputation, brand identity, history, and so on, alongside its bank accounts and credit history. As such, provided that financial pressure didn’t force you to close up shop, the re-establishment of these accounts is fairly straightforward.

You may find that new market trends are a good fit for your previous trading company, with lower overheads and a memorable brand to reclaim its place in the competitive space. However, if your business model has significantly evolved, or if there were outstanding issues that plagued your dormant company, starting fresh may be the best move.

2. Review and Update Company Information

If you decide to restart a dormant company, start by reviewing all company information registered with Companies House.

Update any changes in:

• Registered office address
• Directors’ details
• Persons with significant control (PSC)
• Share structure

Ensure all historical filings are up to date to avoid any complications during the reactivation process.

3. Make Essential Appointments

If changes are needed, formally appoint new directors and a company secretary (if applicable). Ensure all appointments are properly documented and filed through HMRC Online Services.

Inform Companies House of your intention to reactivate the company. This can be done by filing your next set of annual accounts as an active company rather than dormant accounts.

4. Register for Corporation Tax

One of the most crucial steps is to inform HMRC that your business has restarted trading by registering for Corporation Tax again.

This can be done online through your HMRC business tax account and following the guidance there.

Once active, your company will have Corporation Tax obligations:

• Send accounts to Companies House within 9 months of your company’s year-end to meet statutory obligations and avoid penalties.
• Pay any Corporation Tax due within 9 months and 1 day of your company’s year-end ensuring tax compliance.
• Submit a Company Tax Return, including full statutory accounts, to HMRC within 12 months of your company’s year-end.

5. Prepare New Financial Statements

Once your company becomes active again, you’ll need to ensure that you prepare full financial statements that reflect your company’s new trading activities.

Alongside sending your accounts to Companies House within 9 months of your company’s year-end, the first set of business accounts post-reactivation may cover a period spanning longer than 12 months. This will depend on your company’s original accounting reference date.

You will also need to reactivate any bank accounts maintained by the dormant company before you begin trading again. If the accounts were closed, you will need to open them again or establish new ones. Be prepared also to provide relevant financial projections to the bank for any loans or upfront investment capital.

Consulting with a professional business accountant and tax advisor will help you understand what needs to be prepared, to what extent, and when, depending on your company setup.

6. Review and Update Business Policies

Ensure all your business policies are up to date and compliant with current industry regulations.

This includes:

• Health and safety policies
• Data protection and GDPR compliance
• Employment contracts and policies
• Insurance coverage

When is a Good Time to Restart a Dormant Company?

While there is no right or wrong time to restart a dormant company, the timing of reactivation can be crucial, depending on your circumstances.

Consider the following:

• Financial year-end: Reactivating close to your existing year-end can simplify accounting and reporting processes.
• Market conditions: Ensure the timing aligns with your business plans and market opportunities.
• Regulatory changes: Be aware of any upcoming changes in regulations that might affect your business and subsequent trading.

Challenges of Re-Establishing a Non-Trading Company

While the prospect of starting a dormant business again can be exciting, it’s important to be realistic. Be prepared for a few hurdles along the way.

Ensure all historical filings are up to date to avoid any undue penalties or fines. Make sure that you are aware of any changes in regulations or legislation while your company was dormant, ensuring that your new setup is compliant.

Fundamentally, from a client or customer relations perspective, you will need to spend time re-establishing relationships with them (as well as partners, suppliers, and stakeholders). This can take some time before you start to see an uptick in business, particularly if new players have entered the field.

Need Help Restarting a Limited Company?

Reactivating a dormant company involves a handful of legal and financial considerations, but with the help of the experienced accountants and business advisors at Hamlyns, the process will feel easy and hassle-free.

We can help you:

• Evaluate whether reactivating is the best option for your situation
• Handle all necessary filings with Companies House and HMRC
• Prepare financial statements and tax returns
• Advise on tax-efficient structures for your reactivated business
• Provide ongoing support as you rebuild your active company

Restarting a dormant company can be complex, depending on the circumstances for its (temporary) dissolution. However, with the right guidance, it can be an exciting opportunity to breathe new life into your business.

If you’re considering reactivating a dormant company or need assistance with any aspect of the process, don’t hesitate to contact our friendly team. We’re here to help you navigate the complexities and get your business back on track.