Not every company is actively trading. If your business has no income or activity, it may be classed as dormant. Even then, dormant company compliance is essential to meet legal obligations and avoid penalties.
What Is a Dormant Company?
A company is dormant if it has no significant transactions in a financial year. This means no trading, income, or expenses other than those required to keep it registered, such as Companies House fees. Dormant status does not mean you can ignore it. You must still comply with Companies House and HMRC.
Annual Accounts
Even if your company has not traded, you must file annual accounts with Companies House. These simplified dormant accounts confirm no activity. Filing on time is vital as late accounts can result in penalties, even when no business has taken place.
Confirmation Statement
Every company, trading or not, must file a confirmation statement each year. This confirms details at Companies House, including directors, shareholders, registered office, and share capital.
HMRC Obligations
HMRC usually does not require a Corporation Tax return for dormant companies, but you must notify them of the status. If you receive a notice to deliver a return, it must be completed unless HMRC confirms otherwise.
Record Keeping
You still need to keep accurate information about directors, shareholders, and company decisions. If the company owns assets such as property or intellectual property, these must be recorded.
Reactivating a Dormant Company
If you start trading again, you must notify HMRC that your company is no longer dormant. From then, full accounts and Corporation Tax returns will be required.
Why Compliance Matters
Some assume a dormant company requires little attention, but failing to file accounts or a confirmation statement can lead to fines and even strike-off from Companies House. Staying compliant ensures your company remains in good standing and ready to trade when needed.
How Cobble Can Help
At Cobble, we help clients stay compliant whether their companies are trading or dormant. We prepare and file dormant accounts, manage confirmation statements, and advise on reactivating or closing a company when the time is right. With our support, you avoid penalties and maintain peace of mind.