Dormant Company Accounts: What You Still Have to File

A dormant limited company still has to file annual accounts and a confirmation statement at Companies House every year, and late filing penalties apply exactly as they do for a trading company. What usually changes is Corporation Tax: once HMRC knows the company is dormant, it will not normally expect a tax return.

The mistake people make is assuming "dormant" means "no paperwork". It does not. This guide explains what dormant actually means, what you still have to file, how it differs between Companies House and HMRC, and when closing the company makes more sense than keeping it.

Key takeaways

• Dormant companies still file annual accounts and a confirmation statement.
• The normal accounts deadline and late filing penalties still apply.
• HMRC does not usually need a tax return once told the company is dormant, unless it sends a notice to file.
• Companies House and HMRC define dormant differently.
• If you have no use for the company, striking it off may be cheaper than keeping it.

What a dormant company is

For Companies House, a company is broadly dormant if it has had no significant accounting transactions during the financial year. A small number of transactions are ignored for this test, such as paying Companies House fees and money received for shares taken by the founding shareholders. The full rules are on GOV.UK's dormant company guidance.

For HMRC, the question is different: is the company carrying on business activity, trading, or receiving income? A company that has never traded, or has stopped trading and has no income, is usually dormant for Corporation Tax. HMRC explains its approach on its dormant for Corporation Tax page.

Dormant versus trading: what still has to be filed

Dormant accounts are simpler, not optional

Dormant accounts are usually just a balance sheet and a few notes, because there is little or nothing to report in the profit and loss account. Many dormant companies can file them online in a few minutes. They are still due by the normal deadline, which for most private companies is nine months after the year end; our guide to company accounts deadlines explains how to work it out from your year-end date.

A common trap is a company that has a single small transaction during the year, such as a bank charge or a director paying a bill for it. Depending on what it is, that may mean the company is no longer dormant for that year, and simplified dormant accounts would not be appropriate. If there has been any activity, check before you file.

When a dormant company starts to cost money

Even with no activity, a dormant company carries some costs: the confirmation statement fee, the time or fees for preparing accounts, and the risk of a penalty if a deadline is missed. Directors also remain responsible for the company's filings and records for as long as it exists.

If you have no intention of using the company again, applying to strike it off the register can end those obligations. If you do plan to use it — to protect a name, to reactivate later, or as a vehicle for a future venture — keeping it dormant is perfectly reasonable, provided the filings are kept up.

Step by step: keeping a dormant company compliant

1. Confirm the company has had no significant accounting transactions in the year.
2. Tell HMRC the company is dormant for Corporation Tax if you have not already.
3. Diarise the accounts deadline and the confirmation statement date separately.
4. Prepare and file dormant accounts before the deadline.
5. File the confirmation statement, checking that officer and shareholder details are current.
6. Watch for any notice to deliver a tax return from HMRC, and respond if one arrives.
7. Tell HMRC within the time limit if the company starts trading again.

Worked example (illustrative example)

"Oakhurst Ventures Ltd", an invented illustrative example, was incorporated to hold a brand name while its owner worked on a business plan. It never opened a bank account and had no transactions except the incorporation itself.

The owner assumed nothing needed doing. In fact, dormant accounts and a confirmation statement were both due, and the accounts deadline had been missed by a few weeks, triggering a late filing penalty. After filing, the owner told HMRC the company was dormant for Corporation Tax and set reminders for both Companies House dates.

Two years later the owner started trading through the company and told HMRC straight away, at which point normal accounts and tax returns applied again. The company and events are invented to show the obligations, not a description of any real company.

Common mistakes

• Believing dormant means nothing to file. Accounts and the confirmation statement are still required.
• Filing dormant accounts after a transaction. A significant transaction can mean the company was not dormant that year.
• Ignoring a notice to file from HMRC. If one arrives, a return is required even for a dormant company.
• Forgetting to tell HMRC when trading starts. There is a time limit for notifying HMRC.
• Paying for a company you do not need. Striking off may be the cheaper option.

Getting it handled

Our company accounts service starts from £350 per year and covers dormant accounts as well as trading ones. If your company is about to start trading, our guide to the director's loan account is worth reading before money starts moving in and out.

Have a dormant company with a deadline coming up? Get in touch or see our pricing.