A Dormant Company is one that is registered with Companies House but has no significant transactions. A Dormant Company has certain requirements with both Companies House and HMRC meaning that even if a Company meets the definition of being a Dormant Company, paperwork still needs to be filed and there are penalties attached with failing to do so.

What is a Dormant Company 

A dormant company is one which has no significant transactions. There are many reasons why Directors choose to have Dormant Companies for example:

  • To reserve a company name whilst preparing to launch the business;
  • Restructuring a previously active business;
  • An owner requires an extended period of time off due to illness, maternity leave, travel, a sabbatical.

Significant transactions basically means any form of income or expenses with the exception of:

  • filing fees paid to Companies House;
  • penalties for late filing of accounts;
  • Paying late filing penalties to HMRC;
  • money paid for shares when the company was incorporated.

Any other types of payments or receipts would be considered ‘significant accounting transactions’, which would jeopardise the dormant status and require the submission of full statutory accounts.

Dormant Company Accounts and Corporation Tax

A dormant company is obligated to file certain returns even if it has traded or not, these are:

  • Dormant Company Accounts (AA02 Form) annually;
  • Confirmation Statement annually;
  • HMRC Tax Return annually or notification that a Company is dormant (one off).

Step by Step Guide to Filing Dormant Company Accounts and Tax Return

My step by step guide walks you through the process of filing Dormant Company Accounts with Companies House and includes screen shots of an example Dormant Company set of Accounts.  In addition, the guide includes a letter template for you to use so you can notify HMRC of Dormant Company Status.

Changes to Dormant Company Status

A Limited Company can go from trading to dormant but it would still need to meet the above criteria for being dormant.  So the Directors of the Company must ensure that all bills in the name of the Company have been settled with suppliers, taxes and tax returns are up to date and salaries are paid off in full. It is also advisable to close the Company Bank Account if it is still open.

Whilst a Dormant Company can remain dormant for any length of time, if a Dormant Company begins to trade then there is no need to let Companies House know about this change in status, but the Directors must ensure that full Company accounts are filed when filing time comes.  HMRC however do need to be notified so that they know Corporation Tax Returns need to be filed. HMRC can be notified of a change in Company status by:

  • Letter;
  • Phone – 0300 2003410;
  • Signing up with HMRC for an online business account.
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