A dormant company -- one with no significant accounting transactions -- can file much simpler accounts than a trading company. This guide explains what counts as dormant, how to file using form AA02, and when a company must switch back to full statutory accounts.
What Counts as Dormant
For Companies House purposes, a company is dormant if it has had no "significant" accounting transactions during the financial year -- typically meaning no trading income or expenses beyond a narrow list of permitted items such as filing fees paid to Companies House or the payment for shares taken by subscribers when the company was formed. HMRC applies a related but not identical test, broadly based on whether the company is trading and has any taxable income.
Filing Dormant Accounts
Eligible small dormant companies can file simplified dormant company accounts using Companies House form AA02, which is much shorter than full statutory accounts, or file online via the Companies House WebFiling service if the company qualifies. These simplified accounts are still filed annually within the normal filing deadline for the company's financial year.
The Confirmation Statement
Filing dormant accounts does not remove the separate requirement to file a Confirmation Statement each year, confirming details such as registered office, directors, shareholders and PSC (person with significant control) information remain up to date. This applies to every registered company regardless of whether it is trading or dormant.
Becoming Active Again
Once a dormant company starts trading, HMRC must be notified so Corporation Tax registration and filing obligations apply from that point, and full statutory accounts must be prepared for the accounting period covering the return to trading, rather than continuing to file simplified dormant accounts.
Frequently Asked Questions
What does "dormant" mean for a limited company?
A company is dormant for Companies House purposes if it has had no "significant" accounting transactions during the financial year -- broadly, no trading activity beyond filing fees and certain permitted payments such as the cost of a company name change or paying for shares at incorporation.
Is the HMRC definition of dormant the same as the Companies House definition?
No -- HMRC has a slightly different test, generally treating a company as dormant for Corporation Tax if it is not trading and has no other taxable income. It is possible for a company to be dormant for HMRC but not strictly dormant for Companies House if certain non-trading transactions have occurred, so both definitions should be checked separately.
What form is used to file dormant company accounts?
Small dormant companies can typically file simplified dormant company accounts using Companies House form AA02, a much shorter document than full statutory accounts, or file online through the Companies House WebFiling service if eligible.
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Do I still need to file a Confirmation Statement for a dormant company?
Yes -- filing a Confirmation Statement (previously the Annual Return) each year is a separate requirement from filing accounts and applies regardless of whether the company is trading or dormant.
Do I need to tell HMRC my company is dormant?
Yes -- if a company that was previously trading becomes dormant, you should notify HMRC (commonly via the "Corporation Tax: form CT204I" notification or by contacting HMRC directly), so that HMRC does not continue to expect an active Corporation Tax return for a period where the company is not trading.
Can a dormant company still have a bank account?
Generally, having an open but unused bank account with no transactions is usually fine, but if the account has activity such as interest earned or payments being made, this can affect whether the company still meets the dormant test, particularly under the stricter Companies House definition.
What happens if my dormant company starts trading?
Once a dormant company begins trading, you must notify HMRC that Corporation Tax now applies, register for Corporation Tax if not already registered, and from that point prepare full statutory accounts rather than simplified dormant accounts for the relevant accounting period.
Why do people keep a company dormant rather than dissolve it?
Common reasons include protecting a company name from being used by someone else, holding a name in reserve before launching a business, or keeping a shelf company ready for future use, since dissolving and later re-registering a company is more time-consuming than filing simple dormant accounts each year.
Disclaimer: Companies House and HMRC dormant company rules are subject to change. This guide is for general information only and is not professional advice. Consult a qualified accountant and refer to gov.uk for current official guidance before relying on any treatment.
