Dormant Company Accounts

A dormant company is a company that has had no significant accounting transactions during a financial year. Many companies are incorporated but never trade, or they cease trading but remain on the Companies House register. These companies still have filing obligations, but they benefit from simplified accounts requirements.

What Makes a Company Dormant?

Companies House Definition

For Companies House purposes, a company is dormant if it has had no significant accounting transactions during the accounting period. The only transactions that do not count are:

• Payment for shares taken by subscribers on incorporation
• Fees paid to Companies House (e.g. filing fees for the confirmation statement )
• Late filing penalties

Any other transaction — including bank charges, interest received, or a single invoice — makes the company active for that period.

HMRC Definition

For HMRC purposes, a company is dormant if it is:

• Not trading (not carrying on a business activity)
• Not receiving any income
• Not liable for corporation tax

A company can be dormant for Companies House but active for HMRC (for example, if it holds an investment that generates income), or vice versa.

Filing Obligations for Dormant Companies

Companies House

Dormant companies must still file:

HMRC

Once HMRC is notified that the company is dormant, no Company Tax Return (CT600) needs to be filed until the company becomes active again. To notify HMRC:

• Write to HMRC or use the online service to confirm the company is dormant
• HMRC will issue a notice confirming they do not require a CT600
• If the company becomes active, the directors must notify HMRC within 3 months

Dormant Company Accounts

Dormant company accounts are significantly simpler than active company accounts. They can be filed using a short-form balance sheet under section 480 Companies Act 2006.

What Dormant Accounts Contain

Example Dormant Balance Sheet

For a company incorporated with £100 share capital and no other transactions:

Filing the Accounts

Dormant accounts can be filed:

• Online through Companies House WebFiling (free)
• By post using paper accounts
• Through third-party software

Many companies use the Companies House online filing service because dormant accounts are straightforward and can be completed in minutes.

Audit Exemption

Dormant companies are exempt from audit under s.480 Companies Act 2006, provided:

• The company has been dormant since incorporation, or
• The company has been dormant since the end of the previous financial year

This exemption applies regardless of the company’s size. The balance sheet must include a statement from the directors confirming the company was dormant during the period.

When a Company Ceases to Be Dormant

A company ceases to be dormant as soon as it enters into a significant accounting transaction. Common triggers include:

• Receiving payment for goods or services
• Paying a supplier or employee
• Receiving bank interest
• Issuing an invoice
• Paying dividends
• Starting a PAYE payroll

When the company becomes active:

1. Notify HMRC within 3 months of starting to trade
2. Register for corporation tax (if not already registered)
3. File full company accounts for the period in which activity began
4. Start filing Company Tax Returns (CT600) with HMRC
5. Register for VAT if turnover exceeds the threshold

Common Uses of Dormant Companies

Dormant vs Striking Off

If the company will never trade again, the directors may prefer to close the company or apply for strike off rather than continue filing dormant accounts each year.

Penalties for Non-Compliance

Even dormant companies face penalties for failing to file:

These penalties are doubled for a second consecutive late filing.