Dormant companies and their filing obligations

Dormant does not mean that a company has no responsibilities. HMRC and Companies House use dormancy for different purposes, so the company's tax treatment and annual accounts should be considered separately.

Check the Corporation Tax position

A newly formed company that has not started business, or one that has stopped trading and has no other income, may be dormant for Corporation Tax. Tell HMRC where the relevant circumstances apply and keep its response. If HMRC issues a notice to file a return, do not simply ignore it because you believe the company is inactive. ^[1]

Keep a record of when activity stopped or whether it ever began. Investment income or another transaction may make a simple no-sales explanation incomplete.

Check Companies House dormancy separately

Companies House considers significant accounting transactions when assessing whether dormant accounts are appropriate. Its guidance identifies certain excluded transactions, including initial share subscriptions and specified Companies House charges. That test is not identical to the HMRC test. ^[2]

Review actual transactions before selecting dormant accounts. A recurring bank charge, service invoice or payment made on the company's behalf should be considered rather than omitted merely to keep the company labelled dormant.

Maintain the ongoing administration

An inactive company still needs to maintain the relevant company record and meet Companies House filing requirements, including accounts and confirmation statements. Official correspondence must still reach someone responsible. ^[2]

Assign a person to monitor the registered office, email and deadlines. A dormant company held for possible future use can otherwise be forgotten until an overdue notice arrives.

Keep a short annual evidence file

• Statements or confirmation of the absence of transactions.
• Details of any costs paid by a founder or another business.
• HMRC correspondence about dormancy or filing notices.
• Accounts and confirmation statement acknowledgements.
• A record of any change in intended activity.

Restarting or closing the company

If business activity begins, review the tax notification and accounting implications from that point. If the company is no longer needed, consider the proper closure route instead of abandoning it. Outstanding obligations and liabilities should be assessed before a strike-off application.

Review the transaction history rather than the sales total

Start with every company account and the records of costs paid on its behalf. Check bank fees, interest, subscriptions, insurance and payments by founders. A company with no sales may still have transactions that matter when deciding whether dormant accounts are appropriate. Treat unexplained entries as questions to resolve, not items to exclude from the review.

For example, a founder incorporates a company but postpones launch. The company then pays a monthly software subscription from its own account. The absence of customer income does not make that payment disappear. Give the invoice and statements to the accountant and ask which filing treatment follows from the actual record.

Another company may have only an initial share subscription and a qualifying Companies House charge. The relevant exclusions can produce a different outcome. Keep the analysis specific to the transactions rather than copying the result from another inactive company. ^[2]

Make official correspondence part of the review

Open and retain letters from HMRC even where a prior letter described the company as dormant. A notice requiring a return needs to be addressed through the applicable process. Compare the period requested with the company's activity records and ask what must be submitted or clarified. Do not treat a dormancy note in your own spreadsheet as cancelling a filing notice. ^[1]

Maintain the registered office and monitored email throughout the inactive period. If an address service or accountant is being cancelled to reduce costs, establish how future correspondence and filings will be handled first. A dormant company still needs a responsible person who can receive a notice and act on it.

Plan a restart as a change of status

Before restarting, list the contracts, spending and income expected to begin. Revisit the tax position and determine the date from which the company becomes active. Give the accountant the last dormant accounts and any HMRC acknowledgements so the new period can be connected to the previous record.

Check whether old operational arrangements still work. A dormant bank account, expired insurance or abandoned domain can delay the launch. Re-establish the bookkeeping routine from the first new transaction; do not wait until sales become regular to record expenditure.

Decide whether keeping the company remains worthwhile

Prepare an annual holding-cost figure including address services, professional assistance and the time spent on administration. Compare it with the reason for keeping the company. If there is no realistic future use, obtain advice on an appropriate closure route and deal with liabilities and outstanding obligations.

Do not simply stop opening letters or paying service providers. Keeping an inactive company and properly closing it are different decisions with different steps. A documented annual review makes the choice deliberate and helps prevent a forgotten company from accumulating unresolved filing problems.

An accountant can help distinguish a genuinely dormant period from a low-activity trading period. The aim is an accurate filing, not merely the shortest available form.

Use new company compliance planning to explain the inactive period and the filings you need to organise.