Dormant company accounts: the filings that still have to happen

A dormant company is one that has had no significant accounting transactions during a financial year. It still exists, it still has directors, and it still has filing obligations — dormant company accounts delivered to the registrar and, in most cases, a confirmation statement. Dormancy reduces what has to be filed; it does not switch the obligations off.

The definition is narrower than owners expect. A single bank charge, a payment for accountancy fees from the company account, or interest received can be a significant transaction and end dormancy for that year. Certain permitted items — shares taken by subscribers, some filing fees and penalties — are specifically excluded, which is precisely why everything else counts.

What dormant company accounts consist of, and what else is filed

• Dormant accounts with the registrar, in the simplified form permitted for dormant companies.
• A confirmation statement, at least once every twelve months.
• Notification to the tax authority that the company is dormant, where the regime requires it — the rules for corporation tax dormancy and registrar dormancy are not identical.
• Any change of officers, registered office or people with significant control, as it happens.

The mismatch between the two definitions of dormancy — the registrar’s and the tax authority’s — is the trap. A company can be dormant for filing purposes while still needing to deal with the tax authority, or be told by the tax authority that no return is required while the registrar still expects accounts.

Keeping a company dormant on purpose

1. Stop all transactions through the company: no bank charges, no fees, no interest — pay costs personally or from another entity where that is permissible.
2. Consider closing or leaving nil the company bank account, since it is the most common source of accidental transactions.
3. Tell the tax authority, in the manner they require, and keep the confirmation.
4. Keep filing: dormant accounts and the confirmation statement, on time, every year.
5. Maintain the statutory books — dormancy does not pause company law obligations.
6. Review annually whether keeping the shell is worth the filings, or whether it should be struck off.

Dormant is not the same as non-trading. A company can be non-trading — no sales — and still have transactions such as bank interest or costs, which makes it non-dormant and pushes it back into full accounts. Check the definition against the actual bank statement, not against the intention.

Active companies face a judgement dormant ones do not. Going concern is the directors’ assessment that the business can meet its obligations for at least twelve more months, supported by forecasts rather than optimism.

Why people keep dormant companies

Usually to hold a name, protect a brand, park an entity between projects, or preserve a company with history for future use. Each is legitimate, and each costs a little admin per year. Where nobody can articulate the reason, the annual filings are a subscription to nothing, and striking the company off is the cheaper answer.

Because dormancy is a factual question answered from the accounting records, the records still have to exist even when there is almost nothing in them. Ettex Books keeps the year with its handful of entries and the filing dates against it, so the annual question — was anything significant transacted this year — is answered from the ledger rather than from memory. Whether a particular transaction is significant is an accounting judgement, and worth asking an accountant about rather than assuming.