Dormant Company Accounts Explained: What UK Directors Must Still File

What dormant actually means (and why there are two definitions)

For Companies House, a company is dormant if it has had no significant accounting transactions during the financial year. This is grounded in section 1169 of the Companies Act 2006, which defines a company as dormant during any period in which it has no significant accounting transaction. A significant accounting transaction is one that section 386 of the Act requires to be entered in the company's accounting records.

For HMRC, dormant is about Corporation Tax rather than accounting entries. A company is dormant for Corporation Tax when it has stopped trading and has no other income, for example from investments. HMRC also treats a new limited company that has not yet started trading, a flat management company, and an unincorporated association or club owing less than 100 pounds in Corporation Tax as dormant. HMRC describes trading broadly to include buying, selling, renting property, advertising, employing someone or getting interest.

The practical consequence is that these two tests do not always agree. A company might have no significant accounting transactions and so be dormant for Companies House, while a separate question, whether it is trading or earning income, decides its status for HMRC. Treat them as two boxes you tick independently rather than a single label.

What counts as a significant accounting transaction

The Companies House test turns entirely on whether you have recorded a significant accounting transaction. In plain terms, most money moving in or out of the company through its accounting records will count, which is why a dormant company should have no trading activity, no bank interest received, and ideally no active bank account generating charges.

The law does, however, list specific transactions that are disregarded when deciding whether a company is dormant. Under section 1169 of the Companies Act 2006, you disregard the taking of shares in the company by a subscriber to the memorandum as part of forming the company, a fee paid to the registrar on a change of the company's name, a fee on re-registration of the company, a penalty under section 453 for late filing of accounts, and a fee to the registrar for the registration of a confirmation statement. GOV.UK summarises these as filing fees paid to Companies House, penalties for late filing of accounts, and money paid for shares when the company was incorporated.

The lesson is that these permitted exceptions are narrow. Paying your annual confirmation statement fee will not end dormancy, but almost anything else with a real accounting entry, a bank charge, a purchase, an invoice paid, will. If you want to keep a company dormant, keep it genuinely inactive rather than lightly active.

What a dormant company must still file with Companies House

Being dormant for Companies House does not exempt a company from filing. It changes what you file, not whether you file. Every limited company, trading or not, must deliver annual accounts and a confirmation statement to Companies House each year, and that includes dormant companies.

The benefit of dormancy is a simpler set of accounts. If a company is dormant and qualifies as small it can file dormant accounts and does not have to include an auditor's report. This audit exemption sits in section 480 of the Companies Act 2006, which exempts a company from the audit requirements for a financial year if it has been dormant since its formation, or dormant since the end of the previous financial year while meeting the small companies regime conditions and not being required to prepare group accounts.

For the simplest cases there is form AA02, intended for a company limited by shares that has never traded and whose only transaction is the issue of subscriber shares. Alongside the accounts, the confirmation statement remains a separate, mandatory filing that confirms your company details are up to date. Missing either can lead to penalties or, ultimately, strike off, so a dormant company still needs a reliable annual routine.

Dormant for Corporation Tax: the HMRC side

HMRC treats Corporation Tax as a distinct process. If your company has stopped trading and has no other income, you can tell HMRC that it is dormant for Corporation Tax. You can do this online, or by contacting HMRC by phone or post, and you will need details such as the company name and its ten digit Unique Taxpayer Reference.

The reward for telling HMRC is a lighter ongoing load. Once HMRC has accepted the position, you will not have to file another Company Tax Return unless HMRC asks you to or you begin trading again. HMRC may also notify you that it has decided to treat your company or association as dormant, in which case the same relief applies.

There are two points to watch. First, if the company was trading before it became dormant, you still need to file a Company Tax Return covering the trading period, because dormancy only applies from the point trading stopped. Second, dormancy for Corporation Tax does not switch off other taxes automatically. If you are registered for VAT you may need to continue submitting nil VAT returns while you intend to restart, and you should deal with any PAYE scheme if you are not going to trade again in the tax year.

How to keep a company dormant without slipping up

Keeping a company dormant is mostly about discipline. The status is easy to lose because a single significant accounting transaction is enough to break it for Companies House, and any trading or income breaks it for HMRC. The most common accidental triggers are bank interest received, bank account charges, small supplier payments, or renewing a subscription through the company.

A clean approach is to route nothing through the company at all. Where possible, avoid leaving an active bank account that accrues charges or interest, pay only the narrow set of disregarded items directly, and keep a simple record so you can demonstrate dormancy if questioned. If you do need to make a payment that would count as significant, accept that the company is no longer dormant for that period and file the appropriate accounts.

Finally, keep the two regimes in sync in your own diary. It is entirely possible to remain dormant for Corporation Tax with HMRC while still owing an annual accounts and confirmation statement filing to Companies House. If you want help setting up a company correctly from the start so dormancy is easy to maintain, our company formation service is built around getting these foundations right, and you can review the options on our pricing page.

The April 2028 change every company should plan for

A significant change to how accounts are filed is coming, driven by the Economic Crime and Corporate Transparency Act 2023. From April 2028, Companies House will require all UK registered companies to file their accounts using commercial software in iXBRL format. On that date, the web based and paper based filing routes for accounts will close.

This applies to companies generally, and the announcement does not carve out an exemption for dormant companies. In practice, that means a director who currently files simple dormant accounts through the online service or on paper will need to move to software filing for accounts. Companies House has said web filing services will remain available for non-accounts filings such as confirmation statements and director updates, so it is specifically the accounts route that changes.

The package also requires small companies and micro-entities to file a profit and loss account, with an option to opt out of publishing it, and removes some existing shortcuts such as abridged accounts. Companies House has framed the timeline as giving companies one full accounting year plus nine months, around 21 months, to prepare. If you run a dormant company, the sensible step now is simply to be aware that your filing method will change, and to plan how you will produce compliant accounts when the paper and web routes for accounts close.

Conclusion

Dormant is a useful status but a precise one. For Companies House it means no significant accounting transactions, with only a short list of disregarded items such as subscriber shares and filing fees, and it still requires annual dormant accounts and a confirmation statement every year. For HMRC it means not trading and having no other income, and once accepted it removes the need for further Company Tax Returns unless you are asked or you start trading again. Treating these as one thing is the classic mistake.

Get the basics right and dormancy is low effort: keep the company genuinely inactive, file the two Companies House documents on time, tell HMRC when Corporation Tax dormancy applies, and keep an eye on the April 2028 move to software only accounts filing. If you would like a hand setting a company up so it is easy to keep dormant and compliant, request a demo or get in touch and we will walk you through it.

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