Do I really have to file accounts if my company has done nothing?

Yes. As long as the company is on the register at Companies House, it must file accounts every year, even when it has been completely dormant. Dormant accounts are short and simple, but they are not optional.

Does paying for my shares or the confirmation statement break dormancy?

No. The money shareholders pay for their shares when the company is set up, and the annual Companies House confirmation-statement fee, are the two payments allowed while staying dormant. Anything else involving company money will make it active for that year.

Does a bit of bank interest stop my company being dormant?

Yes. Even a few pence of interest, or a single bank account fee, counts as a significant accounting transaction and makes the company active for that year. Keeping a dormant company out of any fee-charging or interest-paying account is the usual way to avoid this.

Do I need to send HMRC a tax return for a dormant company?

It depends. If the company has never traded, you can usually just tell HMRC it is dormant and it will not expect yearly returns. But if HMRC has sent you a notice to deliver a Company Tax Return, you must respond, and for a dormant period that means filing a nil return.

What is the penalty if I file dormant accounts late?

For a private company the automatic Companies House penalty is £150 up to a month late, £375 up to three months, £750 up to six months, and £1,500 beyond six months. It is doubled if you file late two years in a row, and being dormant gives no exemption.

How do I know when my company has stopped being dormant?

It stops being dormant the moment it has its first real money transaction for the business, usually your first sale or first business cost. At that point you file normal accounts and tell HMRC the company is now active so it can set up your Corporation Tax.

Dormant company filing | Simple Returns

What does 'dormant' actually mean?

Dormant has a precise meaning, and it is not the same as 'quiet' or 'not very busy'. For Companies House, your company is dormant in a financial year if it has had no significant accounting transactions during that year. That is the official term, and it is the whole test.

In plain English, a significant accounting transaction is any money moving in or out that the company would normally record in its books. So your company is dormant only if, across the whole year, it did none of the following:

Sold anything, or invoiced a customer, or earned any income
Bought anything, or paid a supplier, or paid for any service
Earned bank interest on a company account
Paid bank charges or account fees
Paid a salary, ran payroll, or paid a director

If even one of those happened, the company has traded for that year and is not dormant. The bank ones catch people out the most: a single 30p of interest, or one monthly account fee, is a significant accounting transaction and breaks dormancy. The usual fix is to keep a dormant company out of any account that charges fees or pays interest.

Two things that do NOT break dormancy

There are exactly two payments the rules let you make while staying dormant, because they are part of simply existing as a company rather than trading:

The money the shareholders paid for their shares when the company was first set up. Paying for your shares on incorporation does not count as trading.
The annual fee you pay Companies House for your confirmation statement (the yearly form that confirms your company details are correct).

Both of these are allowed. Everything else, if it involves the company spending or receiving money, will make the company active for that year.

Yes, you still have to file every single year

This is the part people miss. Being dormant does not switch off your filing duties. As long as the company is on the register at Companies House, it has to file accounts every year, even if those accounts show nothing happened. A dormant company that earns no money and does nothing must still send its yearly accounts in.

The good news is that dormant accounts are about as simple as accounts get. There is no profit, no tax to work out, and no list of costs. They are a short, set form confirming the company was dormant and showing its basic position. You also still file your confirmation statement once a year. That is the rhythm: a confirmation statement and a set of dormant accounts, every year, until the company starts trading or you close it down.

For example

Priya set up Marlow Studio Ltd to hold a business name she might use one day. In its first year it sold nothing, bought nothing, and the only money in or out was the £50 the shareholders paid for their shares on day one and the Companies House confirmation-statement fee. Both of those are allowed, so the company is dormant. Priya still has to file dormant accounts and a confirmation statement for that year. If she forgets because 'nothing happened', the late-filing penalty clock starts ticking all the same.

Dormant for Companies House is not the same as dormant for HMRC

Your company answers to two different bodies, and they treat dormancy slightly differently. It helps to keep them separate in your head.

Companies House (your accounts)

This is the one we have been talking about. Companies House wants your yearly accounts. If the company was dormant, you send dormant accounts. Simple.

HMRC (Corporation Tax)

HMRC cares about whether there is any Corporation Tax to pay. How you handle HMRC depends on your situation:

If your company has never traded at all, you can usually just tell HMRC the company is dormant for Corporation Tax. Once HMRC accepts that, it normally will not expect a tax return each year while the company stays dormant.
If HMRC has sent you a 'notice to deliver a Company Tax Return', you cannot ignore it. That notice is a formal request, and you must respond, even if the company made no money. When the company was dormant for the period, the answer is a nil return: a tax return that shows no profit and no tax to pay.

So the question that matters with HMRC is not 'did we trade?', it is 'has HMRC asked us for a return?'. If a notice has landed, something has to go back, and for a dormant company that something is a nil return. We file that for you when it is needed.

What happens if you file your accounts late

Companies House charges an automatic penalty when accounts arrive late, and it does not care that the company was dormant. A dormant company that files late pays exactly the same penalty as a trading one. The penalty grows the longer you leave it.

For a private limited company (which covers almost every small company), the late-filing penalty ladder is:

Up to 1 month late: £150
More than 1 month but not more than 3 months late: £375
More than 3 months but not more than 6 months late: £750
More than 6 months late: £1,500

There is a sting on top of this: if you file late two years in a row, the penalty is doubled. So a company that files more than six months late two years running is looking at a £3,000 charge for the second year, all for a set of accounts that show the company did nothing. The penalties are automatic, so the only reliable way to avoid them is to file on time.

For example

Tomos owns Penarth Holdings Ltd, a dormant company holding a small asset. He assumes that because it does not trade, deadlines do not really apply, and files the dormant accounts four months after the due date. Companies House issues a £750 penalty automatically. The accounts themselves took minutes to prepare; the cost was entirely the lateness.

When does my company stop being dormant?

Your company stops being dormant the moment it has its first significant accounting transaction, in other words, the first time real money moves for the business. That is usually the first sale or the first business cost you pay through the company. The accounting term for this is that the company has 'started to trade'.

Things that count as starting to trade include:

Making your first sale or issuing your first invoice
Buying stock, equipment, or paying for a service the business needs
Paying a salary or running payroll
Earning income of any kind, including interest on a trading bank account

When that happens, two things change. Your accounts for that year become normal (trading) accounts rather than dormant ones, and you need to tell HMRC the company is now active so it can set up your Corporation Tax. There is a short window to let HMRC know after you start trading, so it is worth doing promptly. After that, you file a full Company Tax Return and pay any Corporation Tax due, just like any other active company.

How SimpleReturns handles it

You do not need to know any of the above to file. We ask you a few simple questions about your company and its year, work out that it was dormant, and generate the correct dormant accounts for Companies House in the format it accepts. You check the figures (there will not be many), and we file them.

If HMRC has sent you a notice asking for a Company Tax Return, we handle that side too: we prepare the nil return for the dormant period and file it, so the notice is answered properly and the company stays in good standing. And the day your company starts trading, we are ready to switch you over to a normal return without any fuss.

General guidance, not advice. This guide explains how the rules generally work for small UK limited companies. It isn't tax advice for your specific situation, if you're unsure, check with us or an accountant.

Dormant company: what (if anything) do you have to file?