Making my Ltd account dormant

**eek** · 27 February 2020, 12:37

Originally posted by NickF View Post

Hi, first post here, but been contracting for years. Here goes:

Due to the contractor market sh*tstorm I've accepted an 'inside IR35' offer. I've already had some time on the bench, so this is a new gig, and something I'm quite keen to work on. It's not an ideal situation, but I'm going to try and make the best of it.

My question is around making my Ltd co dormant. I've been quoted an ongoing £60 per month by my accountancy firm to make the account dormant! I've read a few guides and it doesn't seem too onerous (certainly not worth £60pm).

What (if any) pitfalls could there be, and does anyone have any tips on the process? My company had no current credit or debt obligations other than a Corp Tax due in May. Payroll, etc is up to date, as is VAT. Linked bank account has a very paltry sum in it. I'm expecting dormancy to last 6mths minimum.

It can't be too difficult can it?

Thanks

Any income in this corporate year?

**northernladuk** · 27 February 2020, 13:05

60 quid? That seems expensive. Most accountants offer a discount when aren't in contract approaching that value so seems a tad expensive. Ask for a discount while not trading and see if its competitive and offers a better solution.

**Maslins** · 27 February 2020, 13:28

In our experience there's two different things. What clients think dormancy means, and what dormancy actually means.

Simply not invoicing for a few months does not make your company dormant. You'll still have to submit monthly payroll, quarterly VAT, annual accounts/CT return etc, they'll just show a very low/£nil income level. Therefore the filing requirements hardly reduce, so accountancy fees often wouldn't reduce massively either.

Making your company actually dormant typically means de-registering for VAT/PAYE, and doing a CT return stating the company ceased to trade. Following that, you would still need to file annual accounts and confirmation statement to Companies House, but typically nothing else. It's a fair bit more faff to get your company to this stage, and equally if/when you then wanted to start using it again, you'd likely want to re-register for VAT/PAYE, so extra faff there too. In our opinion generally if you're going for this, you may as well go one step further and close the company.

Also take a bit of care with formally declaring your company ceases to trade. On occasion this may come back to bite you in the bum, with things like using losses, or claiming entrepreneurs relief.

If it could easily just be 6 months, my view would be keep the company ticking over as is, so it's not dormant, just temporarily not invoicing. If your accountant offers you a reduced fee for that, great. In 6 months time you'll then likely be in a better position to know what to expect for the future work-wise. You can then either return to outside IR35 contracting, or if that's not looking viable, I'd suggest moving to close your company.

**NickF** · 28 February 2020, 07:51

Thanks for the replies. I've asked the accountant if they can be a bit more competitive with their monthly fee, so will wait to see what they say.
Must be a grim time to be an accountant too...!

**northernladuk** · 28 February 2020, 09:26

Originally posted by NickF View Post

Thanks for the replies. I've asked the accountant if they can be a bit more competitive with their monthly fee, so will wait to see what they say.
Must be a grim time to be an accountant too...!

No tulip sherlock...

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Making my Ltd account dormant