Companies House is the official registry of all businesses in the United Kingdom and makes account information, as well as other company information, accessible to a broad variety of people.
At the end of March 2021, there were 4,716,126 firms on the Companies House register — including those in the process of dissolution or liquidation.
Each year, all limited companies, whether trading or not, are required to submit annual accounts and a confirmation statement to Companies House. This contains inactive businesses.
A business may be considered ‘dormant' if it is not conducting business and has no alternative source of revenue, such as investments. It's worth mentioning that the term “dormant” denotes something different for Corporation Tax and Company Tax Returns, as well as for a company's yearly filings with Companies House.
Once a company has informed HMRC that it is dormant, it is not required to pay Corporation Tax or file another Company Tax Return unless they receive a subsequent demand to deliver a Company Tax Return. Even though a limited company is dormant for Corporation Tax purposes, it must still register with Companies House and file a confirmation statement and annual accounts.
Companies House classifies a firm as ‘dormant' if it has not engaged in'significant accounting activities' throughout the accounting period. A important accounting transaction is one that should be recorded in the company's accounting records.
Significant trades exclude the following:
Company filing fees House fines for late reporting of accounts are based on the amount paid for shares at the time the company was formed.
If no such transaction has occurred, the firm may be classified as dormant.
If a business is dormant and also qualifies as'small,' it may file ‘dormant accounts' without including an auditor's report.
‘Some directors believe that because HMRC may not require accounts from an inactive business, the same is true for Companies House,' explains Rachel Roberts, head of compliance and enforcement at Companies House. This is not correct.
‘The directors of a company are legally accountable for managing the business and ensuring that financial statements and reports are correctly prepared and filed on time. While a dormant company may not be on the directors' thoughts, even if they have no intention of carrying on business or receiving any sort of income, they must nonetheless file yearly accounts and provide confirmation statements to Companies House each year.
‘Because we aim to inspire faith and confidence in our registers and data, it is critical that the information on the register is accurate.'
A straightforward online template for the electronic submission of dormant accounts for businesses that have never traded. This is applicable to both limited liability companies and limited liability partnerships.
The system has built-in checks to ensure that the defunct company has not overlooked any critical information. Additional information on how to file dormant accounts online is available in our related YouTube video and online guidelines.
Dormant account filing is free; fees only apply if the dormant firm fails to file on time and incurs late filing penalties. It is critical that they take their director obligations seriously, as failing to do so can result in a fine and, in the case of a significant infringement, the company being struck off the register.
For a charge of £13, dormant companies can file their confirmation statement online.
A firm is not required to notify Companies House when it resumes trading. Their subsequent set of non-dormant accounts will demonstrate that the company is no longer dormant.
If a dormant business is no longer required, directors can choose to close it using the new Companies House online tool for striking off and dissolving companies.
