You've set up a limited company but you're not trading yet. Or you've paused the business and you're keeping the company on the shelf for later. Either way, you've probably had a letter from Companies House, or a nudge from HMRC, and you're wondering what you actually have to file.
The short answer is that a dormant company still has obligations, just much lighter ones. Get them right and the admin takes minutes a year. Get them wrong and you can rack up automatic penalties or even have the company struck off.
This guide explains what "dormant" really means (it means two different things to two different bodies), what you have to file and when, and how to file dormant accounts yourself. It's written for directors of small limited companies and for startup founders holding a company in reserve.
What are dormant company accounts?
Dormant company accounts are the simplified set of annual accounts a limited company files with Companies House when it hasn't done anything financially meaningful during its accounting period.
Because there's no trading to report, the accounts are stripped right back. There are no profit figures, no income, and no expenditure for the year. In practice the filing is little more than a balance sheet plus a short statement, signed by a director, confirming the company was dormant throughout the period.
A company stays on the public register, keeps its name, and keeps the option to start trading later. It just tells the authorities, in a much simpler way each year, that nothing happened.
When does a company count as dormant?
A company is dormant if it has had no "significant accounting transactions" during the accounting period. That's the test Companies House uses, and it's stricter than most people expect.
Common reasons a company is genuinely dormant include:
- It was formed to hold a brand or domain name for future use.
- A founder reserved a company name but hasn't started the business yet.
- An owner has paused trading and wants to keep the company alive rather than close it.
- It's a holding company that does nothing beyond owning shares (though this needs care, as income can break dormancy).
The key word is "significant". A single business transaction in the year, like raising one invoice or paying one supplier, ends dormancy for that period.
What is a significant accounting transaction?
A significant accounting transaction is any transaction the company should record in its accounting records. Money in, money out, an invoice raised, a bill paid. If it belongs in the books, it's significant, and it breaks dormancy.
There are a few specific exceptions you can ignore. Under the Companies House rules, the following do not count against dormant status:
- Payment for shares taken by the subscribers when the company was set up (the founders' initial shares).
- Fees paid to Companies House for changing the company name, re-registering the company, or filing the confirmation statement.
- Civil penalties for filing accounts late.
Everything else counts. This is where directors most often trip up. Paying for accountancy software, settling a bank charge, reimbursing a small expense, or letting the business bank account collect interest will all make the company non-dormant for that year. The safest approach is to have no activity at all flow through the company while you intend it to stay dormant.
Dormant for Companies House vs dormant for HMRC: what's the difference?
This is the part that confuses almost everyone. "Dormant" means two slightly different things, and you deal with two different bodies.
| Companies House | HMRC (Corporation Tax) | |
|---|---|---|
| What "dormant" means | No significant accounting transactions in the period | Stopped trading and has no other income (for example, no investment income), or never started trading |
| What you do | File dormant accounts each year | Tell HMRC the company is dormant, so it stops expecting a Company Tax Return |
| Ongoing filing | Dormant accounts and a confirmation statement every year | Usually nothing further, until HMRC sends a new notice |
The crucial takeaway: being dormant does not switch off your Companies House duties. Even a company that does nothing all year must still file annual accounts (the dormant set) and a confirmation statement every year. Skipping either is what gets companies struck off.
If your company serves a specific niche or you're not sure which obligations apply, our guidance for limited companies and for startups holding a company in reserve walks through the lifecycle in more detail.
How do you tell HMRC your company is dormant?
HMRC won't always know your company has gone dormant, so it's usually on you to tell them. You can do this through your business tax account online or by contacting HMRC's Corporation Tax helpline.
What happens next depends on your history:
- If you've never traded since incorporation, HMRC can note the company as dormant and confirm you don't need to pay Corporation Tax or file a Company Tax Return.
- If the company traded and is now stopping, HMRC will normally ask for one final Company Tax Return covering the period up to the date it became dormant. After that, and once they confirm dormant status, you won't need to file further returns unless HMRC issues a new notice.
HMRC can also decide on its own that your company meets the dormancy test and write to tell you that you don't have to pay Corporation Tax or file returns. Keep that letter. If your circumstances change and the company starts trading again, you must tell HMRC within three months of restarting business activity.
If you're closing out a final trading period before going dormant, getting that last return and the accounts right matters. Our Corporation Tax service can handle the final return so you draw a clean line before the company sits idle.
How do you file dormant accounts with Companies House?
You have two routes, and the right one depends on whether the company has ever traded.
Option 1: file online
Companies House has a free online service for filing dormant company accounts, available for companies limited by shares and companies limited by guarantee. It's the quickest route and it's processed fastest. You'll need your company authentication code to sign in.
Option 2: paper form AA02
Form AA02 is the paper "dormant company accounts (DCA)" form. You can only use AA02 if your company has been dormant since it was incorporated and has never traded. Paper filing takes considerably longer to process, so online is usually the better choice where it's available.
What if the company traded and then went dormant?
If your company traded at some point and has since become dormant, you can't use the simple AA02 route. You'll need to prepare full dormant accounts instead. These still show no income or expenditure for the dormant year, but they carry forward the comparative figures from when the company was active, so they need to be prepared properly.
Whichever route you use, the accounts must include a balance sheet with a statement above the director's signature confirming the company was dormant throughout the accounting period, plus the prior year's figures for comparison.
Most dormant companies are also exempt from audit, provided they've been dormant since formation, or were dormant since the previous year-end and qualify as small. If you'd rather not touch the filings at all, our statutory accounts service covers dormant accounts, and our company secretarial service keeps your confirmation statement and registers in order too.
What are the deadlines and penalties?
A private limited company has 9 months from its accounting reference date (its financial year-end) to file accounts at Companies House. That deadline applies to dormant accounts exactly as it does to full accounts. Being dormant does not buy you more time.
The late filing penalties are automatic, and they're the same for dormant accounts as for any other accounts:
| How late the accounts are | Penalty (private company) |
|---|---|
| Up to 1 month | £150 |
| More than 1 month and up to 3 months | £375 |
| More than 3 months and up to 6 months | £750 |
| More than 6 months | £1,500 |
The penalty doubles if you file late two years in a row. So a company that's a few months late two years running could face a £750 penalty turning into £1,500. On top of that, repeatedly failing to file accounts or the confirmation statement can lead to the company being struck off the register entirely.
For a company that's meant to be costing you nothing while dormant, an automatic penalty is an avoidable and annoying expense. Diarise the year-end and the 9-month deadline, even when there's nothing to report.
A quick decision guide
Not sure what you owe? Walk through these steps.
- Has the company had any significant accounting transaction this period? If yes (and it isn't one of the narrow exceptions), it isn't dormant. File normal accounts and a Company Tax Return.
- If it's dormant, have you told HMRC? If not, tell HMRC through your business tax account so it stops expecting a Company Tax Return. File a final return first if the company traded earlier in the period.
- Has the company ever traded? Never traded: you can file the simple AA02 (or, faster, the online dormant accounts service). Traded before: prepare full dormant accounts with comparative figures.
- File before the 9-month deadline, and file your confirmation statement separately each year. Both are still required while dormant.
Illustrative example
Tomas sets up a limited company in June 2025 to hold a brand name while he develops his product. During the year the only money that moves is £100 the two founders pay for their initial shares. He spends nothing else through the company.
Because payment for subscriber shares is one of the listed exceptions, the company has had no significant accounting transactions, so it's dormant for Companies House. As it has never traded, Tomas can file the simple dormant accounts online (or on form AA02). He also tells HMRC the company is dormant, so HMRC confirms no Corporation Tax and no Company Tax Return are due. He still files a confirmation statement, and he diarises the 9-month accounts deadline so he never triggers the automatic £150 late penalty.
This is an illustrative example to show how the rules fit together, not a real client.
Frequently asked questions
Do I still have to file anything if my company is dormant?
Yes. A dormant limited company must still file dormant accounts with Companies House and a confirmation statement every year. Separately, you tell HMRC the company is dormant so it stops expecting a Company Tax Return. Doing nothing is what gets companies fined or struck off.
Does a dormant company pay Corporation Tax?
No. Once HMRC accepts the company is dormant (it has stopped trading and has no other income, or has never traded), you don't pay Corporation Tax or file a Company Tax Return, unless HMRC sends a new notice. If the company traded earlier in the period, HMRC will normally want one final return up to the date it went dormant.
Can I file dormant accounts myself?
Yes. Companies House offers a free online service to file dormant company accounts, and there's a paper form (AA02) for companies that have never traded. You'll need your company authentication code. If the company traded before going dormant, you'll need full dormant accounts with comparative figures, which is harder to do alone.
What's the deadline for filing dormant accounts?
A private company has 9 months from its accounting reference date to file accounts at Companies House, and that applies to dormant accounts too. Miss it and the penalties are automatic: £150 if up to a month late, rising to £1,500 if more than six months late, and these double if you're late two years in a row.
Will paying a bank charge make my company non-dormant?
Almost certainly, yes. A bank charge is a transaction the company should record, so it counts as a significant accounting transaction and ends dormancy for that period. The only items you can ignore are payment for subscriber shares, certain Companies House fees (name change, re-registration, confirmation statement), and late filing penalties. To stay dormant, let nothing else move through the company.
How do I make a dormant company active again?
Start trading, then tell HMRC within three months of the company restarting business activity. From that point the company is active again for Corporation Tax, so you'll need to file Company Tax Returns and pay any tax due, and you'll file full annual accounts at Companies House rather than dormant ones.
Book a free Tax Health Check →
Ready to keep your dormant company compliant?
Keeping a company dormant should be cheap and quiet, not a source of penalties. If you'd like the dormant accounts, confirmation statement and any final Corporation Tax return handled for you, book a free 20-minute call with a Zmartly accountant. We'll make sure the filings go in on time, every year.
