Dormant companies
Your company isn't trading. It still has to file accounts every year.
A company set up and not yet used, or one that has paused, is easy to forget, but Companies House still expects its filings. Here is what 'dormant' means to Companies House and to HMRC, and what still needs doing.
You can prepare everything now; sending to HMRC and Companies House opens soon.
What a dormant company still files
A dormant company still files its confirmation statement and annual accounts with Companies House.(source 1) If it is dormant for Companies House and qualifies as small, it can file 'dormant accounts', with no auditor's report.(source 2)
Dormant means two different things
Companies House and HMRC each have their own test, and a company can meet one without the other.
To Companies House
Companies House call a company dormant if it has had no 'significant' transactions in the financial year.(source 3) Companies House's filing fees, late filing penalties and the money paid for shares when the company was formed don't count as significant.(source 4)
To HMRC, for Corporation Tax
For Corporation Tax, a company is usually dormant if it has stopped trading and has no other income, or is a new company that hasn't started trading.(source 5) Trading includes buying, selling, renting property, advertising, employing someone or getting interest.(source 6) Once you've told HMRC the company is dormant, it doesn't file another Company Tax Return unless HMRC send a further notice.(source 7) If HMRC have sent a notice to deliver a Company Tax Return, a dormant company still files one, online, to show it was dormant.(source 8)
What standing.tax does for a dormant company
- A dormant company's accounts and its Company Tax Return are prepared from its records in the same way, with the questions a dormant company is asked.
- Go through what Companies House hold about your company, item by item, and prepare the year's confirmation statement. Their fee is shown before you agree to it.
- Your company's deadlines with HMRC and Companies House in one place, and what each one still needs from you.
- An email reminder 30 days and 7 days before your accounts, confirmation statement and Corporation Tax deadlines.
When it starts trading again
You don't need to tell Companies House when the company starts trading again: the next accounts that aren't dormant show it.(source 9)
From then on it's an ordinary trading company, and the limited company page covers its year.
Questions people ask
Are dormant accounts penalised if they're late?
The penalty notice comes automatically once accounts are filed late.(source 10) Companies House say an appeal may not succeed if these were the company's first accounts, if it's dormant, or if the reason is that someone else, the accountant included, was responsible.(source 11)
Is my company dormant?
The two tests above are GOV.UK's. If your company's position isn't clear from them, that's one for an accountant.
Where these rules come from
Each numbered sentence above is our plain-English version of GOV.UK’s own words, which are below with a link to the page they come from.
- 1.
“You must file your confirmation statement (previously annual return) and annual accounts with Companies House even if your limited company is: dormant for Corporation Tax dormant according to Companies House”
GOV.UK: Dormant companies and associations - 2.
“But if your company is dormant according to Companies House and also qualifies as 'small' you: can file 'dormant accounts' instead do not have to include an auditor's report with your accounts”
GOV.UK: Dormant companies and associations - 3.
“Your company is called 'dormant' by Companies House if it's had no 'significant' transactions in the financial year that you'd normally report.”
GOV.UK: Prepare annual accounts for a private limited company - 4.
“Significant transactions do not include: filing fees paid to Companies House penalties for late filing of accounts money paid for shares when the company was incorporated”
GOV.UK: Dormant companies and associations - 5.
“Your company is usually dormant for Corporation Tax if it: has stopped trading and has no other income, for example investments is a new limited company that has not started trading”
GOV.UK: Dormant companies and associations - 6.
“Trading includes buying, selling, renting property, advertising, employing someone or getting interest.”
GOV.UK: Dormant companies and associations - 7.
“You do not need to pay Corporation Tax or file another Company Tax Return once you've told HMRC your company is dormant, unless you receive a further notice to deliver a Company Tax Return.”
GOV.UK: Dormant companies and associations - 8.
“If you've filed a Company Tax Return or had a 'notice to deliver a Company Tax Return' You'll still need to file a Company Tax Return online - this will show HMRC that your company is dormant for this period.”
GOV.UK: Dormant companies and associations - 9.
“You do not need to tell Companies House if you restart trading. The next set of non-dormant accounts that you file will show that your company is no longer dormant.”
GOV.UK: Dormant companies and associations - 10.
“You'll automatically receive a penalty notice if your accounts are filed after the deadline.”
GOV.UK: Prepare annual accounts for a private limited company - 11.
“Your appeal may not be successful if: these were your first accounts your company is dormant your company is a charity or a flat management company you cannot afford to pay another director is responsible for filing the accounts it was your accountant's (or anybody else's) fault”
GOV.UK: Prepare annual accounts for a private limited company
