Definition for accountants and bookkeepers

What a dormant company is and what it must file

Last updated 4 October 20266 minute read

Dormant is a status, not a type of company. A dormant company is an ordinary limited company that has stopped, or not yet started, putting transactions through its books, and it still has to file accounts and confirmation statements. Dormant companies are common: as at 3 October 2026, CompanyStack's analysis of the Companies House register shows that the latest accounts of 10.8% of active companies (560,421) are dormant accounts. People keep companies dormant to protect a name, to hold a vehicle ready for a future venture, to pause a business, or because a group subsidiary no longer trades.

The word means different things to Companies House and to HMRC, and a company can be dormant for one but not the other.

What makes a company dormant under the Companies Act?

A company is dormant during any period in which it has no "significant accounting transaction", meaning a transaction that section 386 requires it to enter in its accounting records (Companies Act 2006, section 1169). Section 386 requires a record of all money received and spent by the company, so almost any movement of money counts.

Section 1169 tells you to ignore only these:

• payment for shares taken by the subscribers when the company was formed;
• fees paid to Companies House on a change of name or on re-registration;
• the fee for filing a confirmation statement;
• a penalty for filing accounts late.

In practice, a company stops being dormant if it:

• receives bank interest, a dividend or any other income;
• pays bank charges, an accountant's fee or any other cost from its own account;
• borrows from or repays a director, or buys or sells an asset.

Dormant for Companies House or dormant for HMRC?

HMRC's guidance also lists the kinds of company it usually treats as dormant: a new company that has not started trading, an "off-the-shelf" company held by a formation agent, a company formed only to own an asset such as land, and a company that has stopped trading.

If the company is registered for VAT, GOV.UK says you must deregister within 30 days of becoming dormant if you do not intend to trade again, or send nil returns while dormant if you plan to restart. If it employs people and you do not plan to restart trading in the current tax year, GOV.UK says you should close the PAYE scheme.

What must a dormant company file?

Fees are from Companies House's fees guidance, updated 25 September 2026. For a private company, late filing penalties run from £150 (up to one month late) through £375 and £750 to £1,500 (more than six months late), and double if the accounts are late two years running (GOV.UK). See Companies House filing deadlines and late filing penalties.

Dormant accounts, form AA02 and the audit exemption

A dormant company is exempt from audit if it has been dormant since it was formed, or if it has been dormant since the end of the previous financial year, is entitled to the small companies regime (or would be but for being a public company or a member of an ineligible group) and does not have to prepare group accounts (section 480). Traded companies, banking and insurance companies, e-money issuers, MiFID investment firms and UCITS management companies cannot use the exemption (section 481).

Dormant accounts do not need a profit and loss account or directors' report. The balance sheet must carry statements above the director's signature that the company was entitled to the section 480 exemption, that the members have not required an audit under section 476, and that the directors acknowledge their responsibilities for accounting records and accounts. It must also show the previous year's figures and certain notes (GOV.UK, Preparing and filing Companies House accounts, section 13).

How to file:

• Online. Companies House's online dormant accounts service works for companies limited by shares and companies limited by guarantee.
• On paper, form AA02. Only for a company limited by shares that has never traded and whose only transaction is the issue of subscriber shares. It is not for subsidiaries, charities, companies limited by guarantee, companies without shares or accounts prepared under international accounting standards (form AA02, version 6.0, March 2026).
• Became dormant after trading? You cannot use AA02; prepare dormant accounts instead.
• Acting as an agent. A dormant company that acted as an agent for anyone during the year must say so.
• Dormant subsidiaries. A dormant subsidiary of a UK parent can be exempt from filing its own accounts if all its members agree, the parent gives a statutory guarantee and the subsidiary is included in the parent's consolidated accounts (section 448A).

What changes from April 2028?

Companies House's guidance (updated 25 September 2026) says that from 1 April 2028 a company claiming an audit exemption, including the dormant company exemption, must give an enhanced statement from the directors on the balance sheet that states the exemption claimed and confirms the company qualifies. From the same date accounts can only be filed using commercial software, so the online dormant accounts service and paper form AA02 will no longer be available for accounts. The government confirmed these reforms on 9 June 2026, but the regulations bringing them into force had not been made by 4 October 2026, so the date could still move. Until then, dormant accounts can be filed online, by software or on paper as now.

Is a dormant company closing down?

No. A dormant company stays on the register, its directors keep their duties and its filings continue. If the company is no longer needed, the directors can apply to strike it off using form DS01, which costs £13 online or £18 on paper. Dormant is also a different thing from the register status "active, proposal to strike off" (see what active, proposal to strike off means).

How CompanyStack helps

Every CompanyStack company page shows the type of the company's last accounts, including dormant, its filing deadlines and whether its accounts or confirmation statement are overdue. Accountants managing dormant client companies can save them to a list, see every deadline in the list's deadlines view and add them to their own calendar through the calendar feed, which sets reminders 30 and 7 days before each date. CompanyStack alerts you, in the app and by email on paid plans, when accounts or a confirmation statement become overdue, and when a company on the list files new accounts or changes its officers or owners. See CompanyStack for accountants and pricing.

This guide is general information about UK rules and practice, not legal, tax or financial advice. Last checked 4 October 2026. How we write our guides.

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