A dormant company in the United Kingdom is a company that has ceased trading or has never traded and has no significant financial transactions during a financial period. Despite being inactive, dormant companies are legally required to file accounts annually with Companies House to maintain their compliance and avoid penalties. Filing dormant accounts is a simplified process compared to filing full statutory accounts for active companies, but it still requires careful attention to detail.

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Although dormant companies do not engage in trading activities, they remain legal entities registered with Companies House. Filing dormant accounts is necessary for several reasons:

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• Maintaining legal compliance: Every registered company in the UK, whether active or dormant, must file annual accounts with Companies House.

• Avoiding penalties: Companies that fail to file dormant accounts by the due date are subject to financial penalties and, in severe cases, could be struck off the Companies House register.

• Confirming dormancy: Filing dormant accounts serves as evidence that the company has remained inactive and is not engaging in any trading or financial transactions.

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Before filing dormant accounts, it’s essential to ensure that the company qualifies as dormant. A company is considered dormant if it has had no significant accounting transactions during the financial period.

 

Once you confirm that your company meets the criteria, you can proceed to prepare the dormant accounts.

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Components of dormant company accounts

Dormant company accounts are significantly simplified compared to full accounts. They generally consist of the following documents:

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• Balance Sheet: The balance sheet provides a snapshot of the company’s financial position at the end of the financial year. For a dormant company, the balance sheet is often minimal, with little or no assets and liabilities.

• Notes to the accounts: Brief notes explaining the dormant status of the company and other necessary details.

• Statutory statements: Several statements confirming various matters in regard to the status of dormancy, accounting standards used and the director's responsibilities.

• Director’s signature: The balance sheet must be signed and approved by a director of the company.

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Step-by-step process for preparing the Balance Sheet

Here’s how to prepare the balance sheet for a dormant company:

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1. Company Information: Include the registered company name, registration number, and financial year-end date at the top of the balance sheet.

2. Enter figures for Assets, Liabilities and Capital: For most dormant companies, assets and liabilities will be minimal or even zero. Common entries include:

   • Share capital: This is the nominal value of shares issued when the company was incorporated.

   • Current assets: Often £1 or another nominal amount representing the initial capital invested in the company.

3. Statutory statements: Include a note stating that the company qualifies as dormant under the Companies Act 2006. For a full list of statements, download an example of dormant accounts.

4. Approval: The director must sign and date the balance sheet.

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Once the dormant accounts have been prepared, they must be filed with Companies House. The filing process can be done either online or by post, depending on your preference. With the recent changes by Companies House there will be a move to software-only filing soon, meaning that you will not be able to file accounts any other way that through software. Read more about this here.

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To make it simple and quick for you, you can use our online service to file your dormant accounts - get started now.

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Filing deadlines

Dormant companies are subject to specific deadlines for filing accounts:

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• First Accounts: Due by 21 months after the date of incorporation.

• Subsequent Accounts: Due within 9 months after the company’s financial year-end.

 

It is crucial to meet these deadlines to avoid penalties.

 

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Penalties for late filing

If a company fails to file its accounts on time, Companies House imposes penalties based on how late the accounts are submitted:

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• Up to 1 month late: £150

• 1 to 3 months late: £375

• 3 to 6 months late: £750

• More than 6 months late: £1,500

 

Penalties can double if your company consistently files late for two or more consecutive years.