How to file Dormant company accounts?
In this article we will break down the required filings if you have a dormant company to ensure you are not fined by Companies House or HMRC.
Are you currently taking a break from your business? Is your business currently not trading?
What is a Dormant Company?
A company is considered to be dormant when there are no ‘significant’ transactions in that financial year. 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
Essentially, your company is not trading hence there is no income or expenses to report. Usually, during this dormant period, you wouldn’t have any employees and there would be minimal business activity. Just because the company is dormant now doesn’t mean it will stay in this state moving forward. Dormant accounts can be creatively used to hold assets or even intellectual property. It is a corporate structure without the active business, this could change moving forward. Despite its dormant status, you must meet the legal requirements.
What Do I Need to File?
In respect to corporation tax, if you have stopped trading, owe less than £100 in tax, or are a new company that has not started trading, the company is then considered dormant. If you are a small company:
- £10.2 million or less turnover
- £5.1 million or less on its balance sheet
- 50 employees or less
An exemption will allow you to send unaudited accounts to HMRC and you can send abridged accounts (simpler balance sheet and simpler Profit and Loss account and a directors report). Whilst you are dormant you still need to file annual accounts, a corporation tax return (unless you notify HMRC that you are dormant separately), and your confirmation statement. Taxd can help with this from £99 here.
How to File?
You can file your Confirmation Statement and your Annual Accounts via the Companies House website. Although, this does not complete your corporation tax return to HMRC, and it’s common to forget about notifying HMRC that you are dormant. Therefore, it’s good practice to use software like Taxd that can handle all your filing obligations in one go.
FAQs
What is the purpose for a dormant company?
You can use a dormant company to build out a corporate structure before you start trading, reserve a company name for the future, or to hold assets.
Can I file whilst I am abroad?
Yes, filing accounts can be done online. Click 'start for free' here, if you have any trouble feel free to contact us too.
What are the penalties for not filing with HMRC?
As per HMRC, the penalty is doubled if accounts are filed late in 2 successive financial years (since on or after 6 April 2008).
| Length of period (measured from the date accounts are due) | Companies House (not filing Annual Accounts) | HMRC (not filing Corporate Tax Return) |
|---|---|---|
| Not more than 1 month | £150 | £100 |
| More than 1 month but not more than 3 months | £375 | £1,500 |
| More than 3 months but not more than 6 months | £750 | £3,000 |
| More than 6 months | £1,500 | £7,500 |
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