File once and avoid penalties: Dormant company accounts for UK directors
If your company has had no significant transactions this year, it probably qualifies as dormant for Companies House, but you still owe Companies House a confirmation statement and dormant accounts, often filed on the simplified AA02 form. Separately, HMRC dormancy for Corporation Tax is its own process and may need its own notification.
TL;DR:
Dormant companies must file annual confirmation statements and dormant accounts, even if they have no significant transactions, to avoid penalties.
Companies House considers a company dormant when it has had no significant transactions, excluding filing fees, late penalties, and subscriber shares, but HMRC’s criteria differ.
Online filing of AA02 dormant accounts is faster and validation-checked, but companies that traded before dormancy require bespoke accounts; paper forms are suitable only for never-traded companies.
Late submissions can lead to increased penalties or company strike-offs; timely, routine filings are essential to maintain dormancy status.
Separate notifications are necessary for HMRC and Companies House to keep the dormant status active, especially if incidental income or activity occurs.
Table of Contents
What ‘dormant’ means: Companies House vs HMRC
Companies House and HMRC each run their own dormancy test, and a company can satisfy one without satisfying the other. Companies House considers a company dormant when it has had no ‘significant’ accounting transactions during the financial year. A handful of items do not count against that test.
Filing fees paid to Companies House
Late filing penalties
Money paid for shares when the company was first incorporated (subscriber shares)
HMRC’s dormancy test applies to Corporation Tax specifically, and a company becomes dormant in HMRC’s eyes once it stops trading, stops receiving income and has no other taxable activity. You notify HMRC separately from Companies House, and the two bodies do not share this status automatically. A company can be dormant for Companies House while still owing HMRC a return if it has not formally notified HMRC, so treat the two as parallel obligations rather than one covering the other.
What to file and when: confirmation statement, dormant accounts and deadlines
Even a dormant company must file a confirmation statement every year, confirming that the details Companies House holds (registered office, directors, shareholders) are still correct. This duty does not pause just because the company is not trading.
File a confirmation statement at least once every 12 months, regardless of trading status.
File dormant accounts using the AA02 template if the company has never traded (aside from issuing subscriber shares).
Prepare bespoke dormant accounts, rather than AA02, if the company traded in the past and then went dormant.
The AA02 Dormant company accounts template is a simplified route: it omits a profit and loss account and a director’s report, which full statutory accounts would otherwise require. It is only suitable for companies that have genuinely never traded.
Late filing penalties start at a specified minimum and can rise significantly depending on how overdue the accounts are, with penalties doubling for consecutive late filings, according to Companies House. From February 2026, Companies House is also changing its fee structure, with the digital confirmation statement filing fee set at £50. Build a simple annual calendar around your incorporation anniversary and accounting reference date so neither filing slips past its deadline.
Preparing and submitting dormant accounts (AA02): step-by-step
Before you start the AA02 form, confirm the company genuinely qualifies: it must never have traded, with the only exception being money received for subscriber shares at incorporation. If the company has acted as an agent for anyone during the accounting period, this must be declared, and doing so can disqualify it from the standard template if transactions were recorded as a result.
Gather the company’s registered details, accounting reference date and the figures for called-up share capital.
Confirm the balance sheet carries the required statement that the company was dormant throughout the period.
Have a director sign the balance sheet, since AA02 accounts need a director’s signature, not just a company seal.
Decide between online WebFiling and the paper AA02 form.
WebFiling builds in validation checks that catch missing statements or signatures before submission, and it processes faster than paper. Paper AA02 remains an option but suits only companies that have never traded; a dormant subsidiary or a company that traded before going quiet usually needs bespoke dormant accounts instead. A related walkthrough on statutory accounts preparation covers the broader documentation directors often need alongside this.
Pro Tip: File online where you can: WebFiling won’t let you submit without the required dormancy statement, which is the single most common reason paper AA02 forms get rejected.
Audit exemptions, special cases and exclusions
Dormant companies can usually claim exemption from audit under section 480 of the Companies Act 2006, which sets out the conditions that must be met and the categories of company that cannot rely on it.
The company must have been dormant since the end of the previous financial year, or since incorporation.
Certain regulated entities are excluded from the exemption, including authorised insurers, banking companies and e-money issuers.
A dormant subsidiary may still need to prepare accounts for its parent group even where it is exempt from filing audited accounts itself.
Once a company resumes trading, it loses the dormant exemption from that point and must prepare accounts under the normal rules for its size and type.
Directors of dormant subsidiaries in particular should check whether group reporting requirements apply, since preparing accounts and filing them are not always the same obligation.
Tell HMRC, restarting trading and ongoing obligations
Notify HMRC that your company is dormant for Corporation Tax using HMRC’s online service, by phone, or by post. Once HMRC has confirmed dormant status, you generally do not need to file further Company Tax Returns unless HMRC specifically asks or the company starts trading again.
Incidental income, such as interest on a dormant company’s investments, can affect dormancy status and may trigger a return requirement.
As soon as trading resumes, the company must tell HMRC and resume filing Company Tax Returns on the usual schedule.
Keep an eye on statutory deadlines under corporation tax notification rules, since missing the window to notify HMRC of a change in trading status can create avoidable complications later.
Risks, penalties and restoration: why dormancy is not ‘set and forget’
Treating dormancy as something you set up once and forget is the fastest route to a penalty notice. Companies House late filing penalties start at a set minimum amount and increase depending on the lateness, with the amount doubling for a second consecutive late filing, per Companies House’s own guidance. More detail on how those bands apply is set out in our guide to late filing penalties.
Missing statutory filings repeatedly can lead Companies House to begin striking the company off the register.
Restoring a struck-off company is slower and more expensive than simply filing on time.
Keep the registered office address current and set calendar reminders tied to the confirmation statement and accounting reference dates.
Keystone Financial Advisory: practical checklist and when to get expert help
A short annual routine keeps most dormant companies out of trouble. Confirm your dormancy status against the Companies House test, file the confirmation statement on time, decide whether AA02 or bespoke dormant accounts apply, notify HMRC if Corporation Tax dormancy applies, and flag any incidental income or agency activity before it complicates next year’s filing.
Where the picture is less clean, get advice before filing rather than after a rejection. A dormant subsidiary, a company that traded and stopped, or one facing restoration after a strike-off are all situations where a wrong template or a missed statement costs more time than asking first. A professional accounting team prepares and files dormant and statutory accounts for UK founders and small businesses, and their blog carries regulatory updates as the rules change.
Why the standard dormancy advice undersells the admin
Most guidance on dormant companies focuses on the big question, whether the company qualifies as dormant, and glosses over the administrative discipline that keeps it that way. That is backwards. The qualifying test is usually straightforward to apply. What trips directors up is the year-on-year routine: remembering the confirmation statement when nothing else is happening, choosing the right accounts template when circumstances have quietly changed, and noticing that a dormant subsidiary’s reporting duties are not the same as a standalone dormant company’s.
The conventional advice also treats Companies House and HMRC dormancy as a single status to tick off. They are not. A company can be fully compliant with one and in breach of the other, and the gap only shows up when a penalty notice arrives. If you take one thing from this guide, it should not be “check if you’re dormant”. It should be “build a yearly checklist that covers both regulators separately”, because the filings that get missed are rarely the ones directors forgot about entirely. They are the ones directors assumed someone else, or the other regulator, had already covered.
— Shoaib
Getting dormant accounts off your to-do list
Filing dormant accounts correctly the first time saves you the cost and delay of fixing a rejected AA02 or a missed confirmation statement later. Professional accounting services prepare and file dormant and statutory accounts, confirmation statements, and company set-up paperwork for UK founders and small businesses, so you are not the one checking which template applies or whether HMRC needs a separate notification.
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This suits directors who want the filing handled correctly without learning the full rulebook themselves, whether the company has never traded, has gone dormant after a period of activity, or needs restoring after a strike-off. Our Flexible Accounting Services start from £99 to £199 per month and cover company set-up, confirmation statements, bookkeeping, and year-end reporting as your business grows. Get in touch through Keystonefa to talk through your company’s filing position.
This article is general information, not a substitute for advice from a qualified financial advisor. Consult a qualified financial professional about your own circumstances before acting on anything here.
FAQ
What are the rules for a dormant company in the UK?
A company is dormant for Companies House if it has had no significant accounting transactions in the financial year, excluding filing fees, late penalties and subscriber share money. It must still file a confirmation statement and dormant accounts every year, and separately notify HMRC if it wants Corporation Tax dormancy recognised too.
What are the accounting rules for dormant companies?
Dormant companies that have never traded can usually file simplified accounts on the AA02 template, which skips the profit and loss account and director’s report required for trading companies. Companies that traded and then stopped generally need bespoke dormant accounts instead, and most qualifying dormant companies can claim audit exemption under section 480 of the Companies Act 2006.
What are the disadvantages of having a dormant company?
A dormant company still carries ongoing admin, including an annual confirmation statement and dormant accounts, each with its own deadline and penalty if missed. It also requires a registered office to be maintained and, if circumstances change, prompt notification to HMRC, so it is not a cost-free or paperwork-free status.
How do I file dormant company accounts in the UK?
You can file dormant accounts online through Companies House WebFiling, which checks for required statements and signatures before accepting the submission, or by posting a paper AA02 form if the company has never traded. Online filing is generally faster and catches common errors that lead to paper rejections.
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