Dormant Company Accounts: Exemptions and Filing Requirements

Dormant company exemptions can make a non-trading company very cheap to keep. A dormant company can usually skip an audit, file a one-page set of accounts and, in many cases, stop sending Corporation Tax returns. But each of those dormant company exemptions has conditions, and none of them removes the duty to file accounts and a confirmation statement every year. This guide sets out the main dormant company exemptions, who qualifies, and the requirements that still apply.

First, is your company dormant?

For Companies House, a company is dormant if it has had no significant accounting transactions in the period, apart from Companies House fees, late filing penalties and payment for shares taken on formation. For HMRC, a company is usually dormant if it is not doing business, has no income and is not trading. The two tests are different, so a company can be dormant for one and not the other. Our guide to dormant accounts explains the tests in detail.

Exemption 1: No audit

Most dormant companies do not need their accounts audited. To use this audit exemption, the company must usually:

• have been dormant since it was formed, or since the end of its previous financial year
• be entitled to prepare accounts under the small companies regime, or would be if it were not a public company or a member of an ineligible group
• not be a company that is excluded, such as certain financial services companies

The accounts must include a statement that the company is entitled to the exemption, that the members have not required an audit, and that the directors acknowledge their responsibilities. Shareholders holding at least 10% of the shares can still insist on an audit by giving notice to the company.

Exemption 2: Simpler accounts

A qualifying dormant company can file dormant accounts, usually just a balance sheet and notes, instead of full accounts. Companies House form AA02 is designed for small companies that have been dormant since formation or since the end of the last financial year. There is no profit and loss account, because there was nothing to report.

The simpler format is an exemption in how the accounts are prepared, not from preparing them. The deadline is the same as for any company: 21 months after incorporation for the first accounts, then nine months after each year end.

Exemption 3: Dormant subsidiaries

A dormant subsidiary of a UK parent company can sometimes be exempt from preparing and filing individual accounts at all. The conditions include that the parent guarantees the subsidiary's liabilities, all shareholders agree, and the subsidiary is included in the parent's consolidated accounts. The guarantee is a serious commitment, so this exemption is mainly used in larger groups with many dormant companies.

Exemption 4: Corporation Tax returns

HMRC does not always need Company Tax Returns from dormant companies. If you tell HMRC the company is dormant, it will usually stop sending notices to deliver a return. HMRC may check again after a number of years and ask whether the company is still dormant.

Two important points:

• if HMRC sends a notice to deliver a Company Tax Return, you must file one, even if the company is dormant
• the exemption from returns ends as soon as the company starts to do business, and you must tell HMRC within three months

Exemption 5: No VAT or PAYE registration

A dormant company makes no sales and pays no staff, so it has no reason to register for VAT or PAYE. If an existing company becomes dormant, deregister from VAT and close its PAYE scheme so it is not asked for returns it does not need to make.

What dormant company exemptions do not cover

No dormant company exemptions remove these requirements:

• Annual accounts. Dormant accounts are still accounts, and late filing penalties of £150 to £1,500 apply in full.
• The confirmation statement, at least once every 12 months, with the £50 fee.
• Identity verification for directors and people with significant control. A dormant company's confirmation statement will be rejected without its directors' personal codes.
• An appropriate registered office address and a registered email address.
• Reporting changes to directors, PSCs and addresses within 14 days.
• Keeping a register of members at the registered office or a single alternative inspection location.

Our guide to the confirmation statement deadline covers the yearly filing every dormant company still makes.

Dormant for one authority but not the other

Because Companies House and HMRC use different tests, the dormant company exemptions you can use depend on which one you meet:

Dormant for HMRC, not for Companies House

A company with no income that pays bank charges or a small software subscription is usually still dormant for Corporation Tax, because it is not doing business. But those payments are significant accounting transactions, so it cannot file dormant accounts. It files micro-entity or small company accounts instead, while HMRC may still not require a Company Tax Return.

Dormant for Companies House, not for HMRC

This is unusual, because a company with no significant transactions is normally not doing business either. The practical point is that HMRC decides for itself: if it sends a notice to deliver a Company Tax Return, you must file one, whatever your accounts show. Filing a nil return with the dormant period is usually straightforward.

Dormant for both

The simplest case: no transactions at all apart from Companies House fees. The company files dormant accounts, is exempt from audit, and usually has no Corporation Tax return to file once HMRC has been told.

The bank account trap

The most common way a company loses its dormant status by accident is the bank account. If the company's bank charges a monthly fee and takes it from the company account, that is a significant accounting transaction. The company is then not dormant for Companies House, and cannot file dormant accounts for that year. Some directors pay the fees personally, or choose an account with no charges, to keep the company dormant. Interest received by the company counts too.

Other transactions that end dormant status

• paying for a website, domain name or software from the company account
• a director lending money to the company, or taking money out
• paying an accountant's fee from the company account
• receiving any income, including a one-off payment
• issuing new shares for payment after the company was formed
• buying any equipment or stock

Paying the confirmation statement fee or a late filing penalty to Companies House does not end dormant status, even if the company pays it.

A worked example

A company was formed in June 2025 to protect a brand name for a future product. The director paid £1 for one share and opened no bank account. The confirmation statement fee was paid by the director personally on the company's behalf. When the first accounts are due, the company qualifies to file dormant accounts with no audit, using a balance sheet showing £1 of share capital. HMRC has been told the company is dormant and has not asked for a Company Tax Return. The company still files its confirmation statement on time, with the director's personal code.

If the company had opened a business account with a £5 monthly fee paid from that account, it would not have been dormant for Companies House, and it would need to file micro-entity accounts instead, though it might still be dormant for Corporation Tax.

Restarting a dormant company

When you start using the company, its dormant company exemptions fall away from that point:

1. tell HMRC within three months of starting to do business
2. register for PAYE before the first payday if anyone will be paid
3. register for VAT if you expect to go over the threshold, or voluntarily
4. prepare full accounts for the first period with transactions
5. check that the SIC codes still describe what the company now does

Is it worth keeping a dormant company?

With dormant company exemptions in place, the yearly cost of a dormant company is mostly the £50 confirmation statement fee and the time to file. That can be worth paying to protect a name, keep a company ready for future use, or keep a group structure tidy. If the company has no future, striking it off ends the obligations entirely.

Dormant company exemptions: key points

• Most dormant companies are exempt from audit and can file simple dormant accounts.
• Some dormant subsidiaries can skip individual accounts with a parent guarantee.
• HMRC usually stops asking for returns once told a company is dormant, but any notice must still be answered.
• Accounts, the confirmation statement and identity verification are never optional.
• Bank charges paid from the company account usually end dormant status.
• Review the company's status every year before choosing how to file, because one transaction changes the rules.

Official guidance is on GOV.UK: dormant companies and associations.

Keep your dormant company compliant

We confirm your company qualifies for dormant company exemptions, file dormant accounts and confirmation statements on time, and keep HMRC informed. See our dormant accounts service.