off-the-shelf limited company, hasn't traded, how long can I keep it (without costs)

[zorba11]

Ok, I tried to squeeze a lot into the title ;-)

Let me explain.

Last Jan (08) I purchased an off-the-shelf UK limited company, from a company formations agent, to use as the vehicle for a business idea.

The company has never traded, and I don't want to put any money through it unless we get a decent bit of business, but I feel its advantageous to have it at least created, so we can make reference to it in contracts, job-adverts etc. etc.

However, I'm aware that running a company, even a dormant one, incurs costs/effort: annual returns, annual accounts to companies house.

Concerned about this, I asked my accountant to close it down. He said I could "cancel" the company - i.e. pay a £10 fee, fill in a form, and hey presto it would disappear.

I assume this remedy is ONLY available for dormant companies NEVER TRADED, as when I had another company go dormant about 10 years ago, I had to file returns and accounts to companies house (thus incurring fees) ?

Also, how long can I keep the dormant, virgin (ie. not traded) company going in this state. For ever? For 10 years?

Ideally if I can hang onto it any longer, without incurring costs, I'd like to, and wait for the day when some business comes in for it.

Let me know, maybe I'll be able to contact my accountant and stop the cancellation process.

many thanks!!
z

[James Smith]

You can keep it dormant indefinitely by filing the DCA form and an annual return. Cost you £15 a year.

It has to be really dormant though.

Moreover you simply cant muddle having a limited company and trading as a sole trader. That is to say you cant have a contract in the name of the limited company and trade in your own name as it sounds as if you are doing at this time.

You need to sit down properly with your accountant and understand what you are doing here as you sound very confused about the legal nature of a limited company.

[Peter W]

James is right. There are a lot of issues here, and you need to talk them through with your own accountant.

[zorba11]

whoa there guys!

I have owned and operated several companies and I'm not doing anything untoward here. I know exactly what a Limited Company is for, and actually have never traded as a sole trader or partnership for that matter!

My main business is a company in an unrelated sector to the one I'm talking about.

When I say it hasn't traded, I'm being totally honest about that. From time to time I do some research on the dormant company, but it has never done any work or traded, though from time to time I have tried to get that elusive first engagement for it, hence its useful to have some legal entity that I can refer to so as people can see that at least they will be dealing with a limited company (albeit one that hasn't traded or filed accounts yet) !

But thanks for the advice - that means that I can continue to keep it "on the shelf" and won't have to file any accounts then I take it, with my sole obligation being the annual return, up until the point where it first transacts, and from that point onwards, I'll have to do annual accounts (even if it subsequently becomes dormant) ?

[James Smith]

Fair enough its easy to get the wrong end of the stick on a forum post, but when you say "but I feel its advantageous to have it at least created, so we can make reference to it in contracts, job-adverts etc. etc"

It sounded very much like you where treating this as a trading entity. You don't tend to have contracts or job adverts for an entity that is not trading!

[Peter W]

When I say it hasn't traded, I'm being totally honest about that. From time to time I do some research on the dormant company, but it has never done any work or traded

It is not enough that it has never traded. To be able to file a simple DCA form every year instead of accounts, it must be completely inactive.

If this is the case, your sole obligations every year are the annual return AND the DCA form.

[zorba11]

Fair enough its easy to get the wrong end of the stick on a forum post, but when you say "but I feel its advantageous to have it at least created, so we can make reference to it in contracts, job-adverts etc. etc"

It sounded very much like you where treating this as a trading entity. You don't tend to have contracts or job adverts for an entity that is not trading!

No problems James, sorry if I over-reacted.

My main business is recruitment, and that's run through an established (7years) limited company, lets call it ACME RECRUITMENT. From time to time we get the chance to pitch for assignments that I thought might be better handled under an IT company or a training company (to give two examples that have come up recently), hence wanting to keep a dormant company called for example ACME SERVICES. So when I got these tenders, for want of a better word, I would have put together a pitch, with draft contracts in the name of ACME SERVICES (which didn't get signed in the end, as it hasn't won any engagements so far), and would even have done some research as to who I would hire to do the work for ACME SERVICES if we got the engagement (hence job adverts through my ACME RECRUITMENT, but they didn't mention the name of ACME SERVICES - however to comply with the employment agencies conduct regulations I have to log the hirer's name, i.e. ACME SERVICES, on our systems - even if ACME SERVICES doesn't actually take anyone on)

[zorba11]

One remaining query:

A while back when I had identified someone who I wanted to employ for ACME SERVICES I applied for a payroll scheme with the Inland Revenue. Now, the person turned us down and no salary was ever paid.

I guess the fact that we have an IR payroll number is not going to increase our obligations, above DCA, annual return, and now a (nil) P35 ?