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ComplianceUpdated 2026-02-12

What is a dormant company?

Quick Answer

A dormant company has had no 'significant accounting transactions' during the period. Dormant companies have simplified filing requirements but must still file with Companies House.

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Detailed Explanation

Dormant company definition

A company with no 'significant accounting transactions' - essentially no business activity.

What doesn't count as activity

- Filing fees to Companies House - Late filing penalties - Shares issued on incorporation

What DOES count as activity

- Any trading - Any income - Any expenditure (even small amounts) - Bank interest - Professional fees - Insurance

Filing requirements

Companies House

- Dormant accounts (simplified) - Confirmation Statement annually - Can claim exemption from audit

HMRC

- Tell HMRC company is dormant - No Corporation Tax returns required while dormant - Must notify HMRC when trading resumes

Common uses

- Holding a company name - Pre-trading (before business starts) - Holding company not trading - Post-trading (wound down but not dissolved)

Becoming dormant

1. Stop all trading activity 2. Close bank accounts (or accept no transactions) 3. Cancel VAT registration 4. Tell HMRC company is dormant 5. Continue filing dormant accounts with Companies House

Waking a dormant company

1. Start trading again 2. Register for Corporation Tax within 3 months 3. Register for VAT if applicable 4. Start filing full accounts and CT returns 5. Notify HMRC of start of trading

Costs while dormant

- Companies House fees only (£34/year for Confirmation Statement) - No Corporation Tax if no activity - Consider whether dissolving is better if permanently inactive

Source: Companies House Dormant Company Guidance

Real-World Examples

Company Formation with Future Plans

You incorporate a limited company in January 2024 to secure the company name for a future business venture, but have no actual trading activity. You only pay the Companies House registration fee. This company would be considered dormant.

Temporary Halt in Trading

Your cleaning business ceases trading temporarily in July 2024 while you recover from an injury. You don't receive any income or make any payments except for the annual confirmation statement fee. The company is dormant for the period until you restart trading.

Holding Company Status

A company is set up to hold shares in another operating company. It receives no income directly, only dividends from the operating company, which are then distributed to shareholders. If the only transaction is dividend distribution, it may still be considered dormant, but expert advice is required.

Common Mistakes to Avoid

  • Assuming a company is dormant simply because it's not actively trading, without checking for bank interest or other small transactions.
  • Forgetting to file dormant accounts with Companies House, leading to penalties even if the company is truly dormant.
  • Failing to keep accurate records even for a dormant company, making it difficult to prove dormancy to HMRC if questioned.
  • Thinking a company can remain dormant indefinitely; regularly review whether it's needed or should be dissolved.

What type of accounts do I need to submit as a dormant company?

You submit dormant company accounts, which are a simplified version of full statutory accounts. They typically consist of a balance sheet showing no assets or liabilities, and special notes confirming the company's dormancy. You can generate these accounts using AccountsOS.

If I receive a small amount of interest on my company's bank account, does that automatically mean it's not dormant?

Yes, bank interest is generally considered a significant accounting transaction. Even a small amount of interest income would disqualify the company from being considered dormant for that accounting period. You will need to file full accounts.

Can I reactivate a dormant company later on?

Yes, you can reactivate a dormant company at any time by starting trading activities. Once you begin significant accounting transactions, you must file full statutory accounts at the end of that accounting period.

Do I need to inform HMRC that my company is dormant?

While you don't need to explicitly *inform* HMRC, the dormant accounts you file with Companies House are automatically forwarded to HMRC. Ensure your Corporation Tax Return reflects the dormant status, declaring no trading activity.

My company has a director's loan account. Can it still be dormant?

Potentially. If the director's loan account has been inactive (no transactions) and is only reflecting the initial loan (if any), it might be considered dormant. However, any movement in the loan account (repayments, further advances) would likely disqualify it from being dormant.

Practical Tips

  • Open a separate bank account specifically for the dormant company to avoid accidental transactions affecting its dormant status.
  • Set a reminder in your calendar to review the company's dormant status annually, especially if you plan to keep it dormant for an extended period.
  • Before reactivating a dormant company, consult with an accountant to ensure you're compliant with all current regulations, including VAT registration if applicable.
  • Keep a detailed record of why the company is dormant and any steps taken to maintain its dormancy (e.g., no trading, no income) in case HMRC queries the status.

Related Questions

How do I close my limited company?

The cheapest option is voluntary strike-off (£10 fee, assets under £25,000). For larger companies, use Members' Voluntary Liquidation (MVL). Outstanding tax affairs must be settled first.

What is a Confirmation Statement?

A Confirmation Statement (formerly Annual Return) confirms your company's details are correct with Companies House. It's due at least once every 12 months and costs £50 to file online (£110 on paper).

When are annual accounts due?

Annual accounts must be filed with Companies House within 9 months of your accounting period end. For HMRC, you have 12 months to file your Corporation Tax return including the accounts.

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