If you have a dormant company in Glasgow, you might think that because it isn’t trading, there’s nothing to file with Companies House or HMRC.
But even dormant companies need to file certain documents each year to stay compliant.
Don’t worry - it’s not complicated! This guide is here to break down what documents you need to file and how to avoid penalties.
Understanding dormant companies
What is a dormant company?
A dormant company is a business that isn’t doing any trading or financial activities during a given financial year. This means:
- You’re not making any money.
- You’re not buying or selling anything.
- You’re only paying minimal costs like Companies House fees.
A dormant company is essentially “sleeping” until you decide to use it again.
Dormant company vs a non-trading company
Dormant companies and non-trading companies aren’t the same. A non-trading company may have some financial activity but isn’t actively engaged in new business.
For example, a non-trading company might still pay for existing contracts or services, whereas a dormant company shouldn’t have any financial activity (except minor fees).
Understanding this difference helps ensure your company files the correct accounts.
What activities make your company active?
Even if you’re not trading, certain transactions can accidentally make your company active again. Here are a few things that could change your company’s status:
- Receiving interest on a business bank account.
- Paying salaries or dividends to directors or shareholders.
- Buying and selling goods or services.
If your company does any of these activities, it’s considered active and no longer dormant.
Do dormant companies need to file accounts?
Yes! Even if your company isn’t trading, you still need to file:
- Dormant company accounts with Companies House.
- A yearly confirmation statement with Companies House.
- A Company Tax Return with HMRC (in some cases, you may be exempt from this).
Filing exemptions with HMRC
Not all dormant companies need to file a Company Tax Return, but it’s important to check. Here’s how to notify HMRC if your company is dormant:
- Write to HMRC or fill out their online form.
- Once HMRC accepts that your company is dormant, you don’t need to file a tax return unless your company becomes active again.
Types of accounts to file for dormant companies
Micro-entity dormant companies
If your dormant company qualifies as a micro-entity, you can file simpler accounts. Micro-entities must meet at least two of the following criteria:
- Turnover of £632,000 or less
- £316,000 or less on the balance sheet
- No more than 10 employees
Standard dormant accounts
If your company doesn’t qualify as a micro-entity, you’ll need to file standard dormant accounts, which include a simple balance sheet and a statement of dormancy.
Deadlines for filing dormant company accounts
First accounts
For new dormant companies, you must file accounts within 21 months of the incorporation date.
Subsequent years
After the first filing, accounts need to be submitted within 9 months of your company’s financial year-end.
Confirmation statement deadlines
In addition to filing dormant company accounts in the UK, you must file a confirmation statement with Companies House once a year. This ensures all the details about your company are up to date.
What happens if you miss the deadline?
Penalties for late filing
Even if your company is dormant, you can still face penalties for missing filing deadlines. Here’s what happens if you file late:
- 1 day late - £150 fine.
- Up to 1 month late - £375 fine.
- 1-3 months late - £750 fine.
- More than 3 months late - £1,500 fine.
Risk of being struck off
If you miss multiple deadlines, Companies House could strike your company off the register, meaning it would no longer legally exist.
Managing a dormant company?
Stay compliant with simple, accurate filings to avoid penalties.
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How to file dormany company accounts
Step-by-step guide
Filing dormant company accounts is quick and easy. Here’s how you do it:
Step 1 - Prepare your balance sheet
Your balance sheet for a dormant company should include:
- Company name and registration number.
- The date of the financial year-end.
- A statement confirming that there have been no significant transactions during the financial year.
Step 2 - Submit accounts to Companies House
You can file these accounts online using the Companies House WebFiling service. It’s simple and can be done in just a few clicks.
Step 3 - Submit the confirmation statement
Every year, file a confirmation statement online to keep Companies House updated with your company's details. This is a legal requirement, even for dormant companies.
Step 4 - Check with HMRC
If you’ve notified HMRC that your company is dormant, you usually won’t need to file a Company Tax Return - but check to ensure everything is in order.
Checklist for filing dormant company accounts
Here’s a quick checklist to make sure you don’t miss anything when filing dormant accounts in the UK:
- Notify HMRC if your company is dormant
- File dormant accounts with Companies House
- Submit your confirmation statement yearly
- Check with HMRC for any tax filing exemptions
Managing your dormant company
Benefits of maintaining a dormant company
There are a few good reasons why people keep their companies dormant instead of closing them down:
- Hold onto the company name. Keeping your company dormant means no one else can use your business name.
- Easier to restart. If you plan to start trading again, it’s much easier to reactivate a dormant company than to set up a new one.
- Low maintenance. You can keep your company registered without needing to trade, which is useful if you’re still working on your business idea.
Managing expenses for a dormant company
While your company is dormant, you can still pay some minimal expenses. Here are a few costs that are allowed:
- Bank fees for maintaining a company bank account.
- Web hosting or other minimal expenses to keep your business presence alive.
Just remember, if you start making larger payments, you could lose your dormant status.
Dormant status impact on shareholders and directors
Even though the company is dormant, there are still rules that shareholders and directors must follow:
- Shareholders. Dormant companies don’t pay dividends, but shareholders still retain their shares.
- Directors. Directors are still responsible for filing dormant accounts and ensuring the company follows all legal requirements.
How to close a dormant company
Learn how to dissolve a limited company by requesting a voluntary strike-off in this video.
Common mistakes to avoid when filing dormant company accounts
Forgetting to declare your company is dormant
Just because you’re not trading doesn’t automatically mean your company is dormant. You must officially notify HMRC to make sure your company is classified as dormant.
Filing incorrect accounts
Make sure you’re filing dormant company accounts, not trading accounts, to avoid extra complications.
Final thoughts
Filing dormant company accounts is a necessary but simple task that keeps your company compliant with Companies House and HMRC.
By following the steps in this guide, you can easily maintain your company’s dormant status, avoid penalties, and keep the option open to restart your business in the future.
Don’t forget to file on time and keep track of any minor expenses so that your company remains in good standing.
About the author
Jon Dell is a Chartered Accountant who qualified at PwC, the largest professional services firm in the world. He has worked internationally as well as across the public and private sectors. He now has his own practice where he works on both personal and Limited company taxation services. His particular focuses are property income and taxation as well as medical outsourcing companies.
