UK Credit Reports

What does Dormant or Non-Trading really mean?

The term 'dormant' applies to a company that has 'no significant accounting transactions' during the financial year.
The term 'non-trading company' has no legal meaning, and again has no significant accounting transactions, which simply means no entries in the company's accounting records.
The amount paid for shares when the company is first incorporated and costs incurred in the Companies House registration do not count as significant accounting transactions.

What is the difference between a Non-Trading company and a Dormant company?

A company can be non-trading in the sense that it isn't doing business. It may however, still have other accounting transactions going through its books, which means that it is not dormant in a legal sense.
A dormant company must not have any accounting transactions except specific allowable transactions that can be disregarded.

Why have a Non-Trading or Dormant company?

The most common reason for coming across non-trading or dormant companies, is that they are simply incorporated to protect a trading style or product name. The shares of these companies are invariably held by a holding company, this is normally the company you should be interested in. Always look at the shareholders of such companies.

 

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