Dormant or Never Traded? The One Filing You Still Owe
If you have never traded, it is natural to assume you owe nothing. You are 90% right, and the missing 10% is the part that quietly racks up penalties. There is exactly one thing a dormant company still files each year. Here is what it is, why it is quick and cheap, how telling HMRC you are dormant switches the tax return off, and the clean way to close the company if you would rather be done with it for good.
- Corporation Tax
- 19% – 25%
- Marginal relief band
- £50,000 – £250,000
What "dormant" actually means
In plain terms: if no money has moved through the company, you are dormant. A company is dormant when it is not trading and has no other income, such as from investments. GOV.UK describes this as having no significant accounting transactions in the financial period, so nothing has moved in or out that the accounts need to record. The catch is that one word, "dormant", means something slightly different to Companies House and to HMRC, and you deal with them separately.
- Usually still dormant: a company set up but never traded, or one that has finished trading and gone quiet.
- Breaks dormancy: invoicing a customer, buying or selling, earning bank interest or investment income.
- Getting the definition right is what lets you use the cheap, simple route.
Being dormant for Companies House and dormant for Corporation Tax are decided separately. One does not settle the other.
Companies House: you still file accounts, but the easy version
GOV.UK is direct about it: you must file annual accounts with Companies House even if your company is dormant. The relief is that a qualifying dormant company files simple dormant accounts, not the full set. A company limited by shares that has never traded can file form AA02, a short form with no auditor needed and no Corporation Tax to work out. The catch most people miss is the word "every": this is a yearly filing, not a one-off, due 9 months after your financial year end (21 months after registration for the first set). There is also a separate short yearly confirmation statement to keep your company details up to date, so the accounts are not quite the only thing on the Companies House side.
The filing itself is small. The real risk is forgetting it for a year, which is exactly how a £150 job becomes a £1,500 one. It is the one job worth taking off your plate for good.
HMRC: telling them you are dormant pauses the tax return
Separately from Companies House, you can tell HMRC the company is dormant for Corporation Tax. Once HMRC agrees, you do not pay Corporation Tax or file another Company Tax Return for the dormant period, unless HMRC sends a fresh notice or the company starts trading again. If HMRC has already issued a notice to deliver a return, you may need to file one final Company Tax Return up to the dormant date first. After that, the returns stop. When the company starts trading again, you simply tell HMRC it is active and the return restarts.
Dormant pauses the HMRC return, NOT the Companies House accounts. Telling HMRC you are dormant stops the Company Tax Return only. Your annual accounts are still due every single year.
If you ignore even the dormant accounts
A dormant company that files its accounts late picks up the same late-filing penalties as a trading one. A company that never made a penny can still be fined simply for filing its dormant accounts late: £150 up to one month late, rising to £375, then £750, then £1,500 over six months late, and doubled if accounts are late two years running. If the accounts never arrive, Companies House can compulsorily strike the company off against your wishes, the bank account can be frozen, and anything it still owns can pass to the Crown.
The work is small. The danger is that a dormant company is easy to forget, with no invoice and no customer to remind you, until a penalty letter arrives. Penalties stop climbing the moment you file, and never start at all if the simple accounts go in on time.
Want to close it for good? The clean way
If the company has served its purpose, there is a proper way to close it. You apply for voluntary strike-off using form DS01, signed by a majority of directors, for £13 online (£18 by paper). The order matters: bring your accounts and Corporation Tax up to date with HMRC first, marking the accounts and return as final and paying any tax due, then send a copy of the DS01 within 7 days to anyone affected, such as shareholders and creditors. Get the order wrong and a refund or open tax return can block your strike-off for months. The one approach to avoid is simply walking away, because an abandoned company can be compulsorily struck off, its account frozen, and its assets passed to the Crown.
- Prepare and file final accounts and a final Company Tax Return with HMRC, and pay any Corporation Tax due.
- Apply with form DS01: £13 online or £18 by paper.
- Send a copy of the DS01 to affected parties within 7 days.
If you might use the company again, keeping it dormant and filing the simple yearly accounts is often cheaper than closing now and forming a new company later.
Common questions
My company has never traded. Do I really have to file anything?
You are 90% right that you owe nothing, but not quite. You still file annual accounts with Companies House every year, even when dormant. For a company limited by shares that has never traded, those are the simple dormant accounts (form AA02), with no auditor needed. There is also a short yearly confirmation statement that keeps your company details up to date. Separately, you can tell HMRC the company is dormant for Corporation Tax, which pauses the Company Tax Return until the company is active again.
I already have an accountant. Is moving a dormant company a hassle?
No. Dormant companies are among the simplest to move, because there is so little to hand over. We handle the whole switch for you, file the dormant accounts and the confirmation statement on time each year, and keep the tax return switched off, so you never have to remember any of it again.
Does telling HMRC I am dormant stop my Companies House accounts too?
No, and this is the point directors most often get wrong. Telling HMRC you are dormant pauses the Company Tax Return only. It does not stop your annual accounts, which are still due at Companies House every single year for as long as the company exists.
What happens if I just ignore the dormant accounts?
A dormant company faces exactly the same late-filing penalties as a trading one: £150 up to a month late, rising to £1,500 over six months, and doubled if you are late two years running. Ignore them long enough and Companies House can compulsorily strike the company off, freeze its bank account, and pass its assets to the Crown.
How do I close the company down for good?
You apply for voluntary strike-off using form DS01, signed by a majority of directors, for £13 online or £18 by paper. First bring your accounts and Corporation Tax up to date with HMRC and pay anything due, then send a copy of the DS01 to affected parties within 7 days. Do not simply stop filing and walk away, as that risks a compulsory strike-off and a frozen account.
Print this part and work through it
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What to do if your company is dormant
Work through it in order: confirm you are genuinely dormant, deal with the one filing you owe and switch the tax off, then stay compliant or close the company cleanly.
- Check the company has had no significant accounting transactions in the period.
- Confirm there is no trading and no other income, such as bank interest.
- Find your company number and check the public register for overdue accounts.
- Find your Companies House authentication code, or request a new one (about 5 days).
- If limited by shares and never traded, prepare the simple dormant accounts (AA02).
- File the dormant accounts by the 9-month deadline (21 months for the first set).
- File your yearly confirmation statement to keep company details up to date.
- Tell HMRC the company is dormant for Corporation Tax to pause the return.
- If HMRC issued a notice, file one final Company Tax Return up to the dormant date.
- Get HMRC confirmation in writing that no further return is due.
- Set a yearly calendar reminder and sign up for Companies House email reminders.
- Decide whether to keep it dormant or close it for good.
- To close, bring everything up to date then file DS01 (£13 online) and copy affected parties within 7 days.
Figures and rules verified against GOV.UK for 2026/27. General information, not advice for your circumstances.
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For guidance only — this factsheet does not constitute professional advice and is not a substitute for advice based on your specific circumstances. Whilst every care has been taken in its preparation, it may contain errors for which we cannot be responsible. Figures are for the 2026/27UK tax year (England, Wales & Northern Ireland) and may change. Last reviewed 13 February 2026.