Dormant company accounts

For Companies House accounts, a company is dormant if it had no significant accounting transactions during the financial year. A significant accounting transaction is one that would normally need to appear in the accounting records. That makes dormancy a question of what actually happened, not whether the company made a profit or issued many invoices.

A company with no sales can still be active if it paid expenses, received bank interest, bought equipment, paid a director, incurred professional fees or moved money through its bank account. By contrast, certain limited transactions are disregarded, including payment for shares taken by subscribers on incorporation and Companies House filing fees or civil penalties.

Common problems include a bank charge, software subscription, insurance premium, interest receipt or payment made on the company's behalf. Even a small amount can mean the company was not dormant. A balance carried forward from an earlier active period does not automatically prevent dormancy, but activity involving that balance during the year may do so.

HMRC and Companies House also use dormancy in different contexts. A company may be dormant for Corporation Tax after it stops trading, while still needing to file accounts that reflect earlier activity in the financial year. This package is based on the Companies House accounting period and does not include a Corporation Tax return.

If the company was dormant at the start of the year and then begins trading, the accounts for that financial year are normally active company accounts. They must cover the whole period and include the transactions from the date trading began. Dormant accounts cannot be filed for only the first dormant portion.

The company may also need to tell HMRC that it is active for Corporation Tax, maintain accounting records and consider VAT or PAYE registration. In that situation, our accounts and CT600 package may be the right route. We will not force an unsuitable dormant filing through at the lower price.

A company remains a legal entity even when it is not trading. Unless an exemption applies, it still has annual accounts and confirmation statement obligations. Dormant accounts are simpler than trading accounts, but directors remain responsible for filing them accurately and on time.

If the company is no longer needed, dissolution may be more sensible than maintaining annual filings indefinitely. Dormant accounts are appropriate when you intend to keep the company available, protect a name, hold it for a future project or pause activity temporarily.