"Dormant" sounds like a company you can forget about — parked, switched off, nothing to do. That's the dangerous half-truth. A dormant company has fewer obligations than a trading one, but it doesn't have none, and the most common way dormant companies come unstuck is their owner assuming dormant means do-nothing and missing the filings that are still due. Here's what dormant actually means, what you still have to file, and how to put a company into dormancy properly.
There are two definitions, and they're not the same
The first thing to get straight — because it's where most of the confusion sits — is that "dormant" means two slightly different things depending on who's asking.
Companies House considers your company dormant if it's had no significant accounting transactions during the financial year. The test is transaction-based: has money meaningfully moved? A few specific things are excluded and don't break dormancy — the fee for your confirmation statement, Companies House filing fees, any late-filing penalties, and the shares taken by the original shareholders when the company was formed. So you can pay a Companies House fee and still count as dormant.
HMRC uses a different test: your company is dormant for corporation tax if it's stopped trading and has no other income at all. And "no income at all" is stricter than people expect — even a small amount of bank interest on the company account counts as income and makes the company active for HMRC, even if Companies House would still see it as dormant.
The practical upshot: it's entirely possible to be dormant under one definition and not the other. For a genuinely inactive company both will usually apply, but it's worth confirming your position with each separately when the company first goes dormant.
What you still have to file
This is the part that catches people out. Even fully dormant, your company has ongoing obligations to Companies House.
You still file annual accounts — but the dormant version is far simpler. They're filed on form AA02, and they're essentially just a balance sheet (often showing little more than the share capital) plus a statement confirming the company is dormant. No profit and loss account, no directors' report, no audit. They're still due nine months after your year-end, and late filing still triggers the same automatic penalties — £150 rising to £1,500 — and ultimately strike-off, exactly as for a trading company.
You also still file a confirmation statement every year, confirming your company's details on the public record are correct. Dormancy changes nothing here: the statement is due annually regardless, and failing to file it remains a criminal offence that can lead to the company being struck off.
What you generally don't have to keep filing is a corporation tax return — but only once you've told HMRC the company is dormant, which brings us to how you actually do this.
How to make a company dormant
There's an asymmetry worth knowing: Companies House dormancy is automatic, but HMRC dormancy you have to tell them about.
For Companies House, there's no application or form to declare dormancy — you simply prepare and file dormant accounts (AA02) at the end of the financial year, and that's that. For HMRC, the opposite: they don't know your company has stopped trading unless you tell them, and if you stay silent they'll keep expecting a tax return and may issue penalties for not filing one. So you actively notify HMRC — through your company's HMRC online business tax account — that the company is now dormant. Once they've confirmed it, the annual corporation tax return requirement drops away until either the company starts trading again or HMRC issues a fresh notice to file.
Before going dormant, it's also worth tidying up: settle any outstanding corporation tax, VAT, PAYE and supplier bills first, and decide whether to close or suspend a VAT registration or PAYE scheme you're no longer using, so they don't generate obligations of their own.
The traps that accidentally end dormancy
Because the tests are about transactions and income, small bits of activity can quietly break dormancy and pull you back into full filing — usually without you realising until the accounts are due. Bank interest is the classic one: leave money in an interest-bearing company account and you've created income that makes the company active for HMRC. Paying a subscription, a renewal, or reimbursing an expense through the company account can count as a significant transaction for Companies House. The safest approach for a genuinely dormant company is to have nothing moving through it at all — many dormant companies don't keep a business bank account open for exactly this reason.
And one judgement call worth making honestly: if you've no real intention of trading through the company again, keeping it dormant indefinitely means filing dormant accounts and a confirmation statement every year forever. Sometimes it's cleaner to close the company properly instead. Dormancy is for companies you're genuinely keeping in reserve, not ones you've simply finished with.
Common questions
- Does a dormant company have to file accounts?
- Yes. It files simplified dormant accounts (form AA02) — a balance sheet and a dormancy statement, no profit and loss and no audit — within nine months of the year-end. Late filing carries the same penalties and strike-off risk as for any company.
- Does a dormant company need to file a confirmation statement?
- Yes. The confirmation statement is due every year regardless of whether the company is trading. Dormancy doesn't change it.
- Do I have to tell HMRC my company is dormant?
- Yes. HMRC won't know unless you tell them, through your online business tax account. Once they confirm it, you won't need to file a corporation tax return each year — but until you tell them, they'll keep expecting one.
- Does bank interest stop my company being dormant?
- For HMRC, yes — any income, including bank interest, makes the company active for corporation tax. It's one of the most common ways dormancy is accidentally broken.