Keeping a company dormant is not as simple as avoiding sales. HMRC and Companies House apply strict rules to determine whether a company qualifies as dormant, and even minor transactions can invalidate that status. This guide explains how to keep a company dormant, what activities to avoid, what filings are still required, and how to remain fully compliant throughout the financial year.
Quick answer: A company is dormant if it has had no significant accounting transactions during its financial year. Directors must ensure no trading or income activity occurs and that only permitted statutory transactions take place.
If you need a full breakdown of the legal definition and filing implications, see What Are Dormant Accounts?.
For Companies House, dormancy means the company has had no significant accounting transactions. For HMRC, dormancy means the company is not active for Corporation Tax purposes. These definitions are similar but must both be satisfied.
No sales of goods or services
No regular income received
No employee or contractor payments
No business operating expenses
Experience insight: Many directors believe that “no trading” automatically means dormant. In practice, we regularly see dormant status invalidated by small but repeated transactions such as bank charges, subscriptions, or contractor reimbursements that were overlooked during the year.
A significant accounting transaction is any transaction that must be entered into the company’s accounting records.
Permitted transactions while dormant usually include:
Payment for shares taken by subscribers
Fees paid to Companies House for filing
Certain civil penalties
However, regular bank charges, service subscriptions, professional fees, or income receipts can invalidate dormant status.
Important: If a company becomes active during the year, it may need to file full statutory accounts and notify HMRC immediately.
Dormancy does not remove filing obligations. Companies must still submit documents annually.
Dormant accounts must be filed with Companies House, usually within 9 months of the accounting reference date for private limited companies. If you're unsure about the preparation process, see How To File Dormant Accounts for a step-by-step guide.
The confirmation statement must be filed at least once every 12 months to confirm company details remain accurate.
If HMRC has previously marked your company as active, you must notify them that it is dormant for Corporation Tax purposes.
Important: Failure to file dormant accounts or confirmation statements can result in financial penalties or the company being struck off the register.
The most common reasons companies accidentally lose dormant status include:
Receiving small amounts of income
Paying insurance or subscription fees
Processing refunds through the company account
Paying for domain names or website hosting
Entering into new service contracts
For a deeper breakdown of errors that lead to rejected filings or penalties, see Common Dormant Filing Mistakes.
Keeping a company dormant requires ongoing monitoring, not just year-end filing.
Review bank activity periodically
Ensure directors understand dormant rules
Monitor correspondence from Companies House
File well before deadlines
Even if there has been no trading activity, annual compliance obligations remain. Many directors find it helpful to review common questions in our Dormant Accounts FAQ before submitting.
Filing dormant accounts online ensures faster submission, reduced risk of rejection, and confirmation that your company remains compliant with Companies House requirements.
