{"id":6806,"date":"2019-10-07T09:13:01","date_gmt":"2019-10-07T08:13:01","guid":{"rendered":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/?p=6806"},"modified":"2024-01-30T10:25:18","modified_gmt":"2024-01-30T10:25:18","slug":"dormant-company-accounts-saving-your-time-and-money","status":"publish","type":"post","link":"https:\/\/www.qualitycompanyformations.co.uk\/blog\/dormant-company-accounts-saving-your-time-and-money\/","title":{"rendered":"Dormant company accounts – saving you time and money"},"content":{"rendered":"

A dormant company is one that\u2019s not carrying out any business activity or receiving an income. This renders it inactive for Corporation Tax purposes as far as HMRC is concerned. It also means that abridged and unaudited accounts, known as ‘dormant company accounts’ can be sent to Companies House in certain cases.<\/p>\n Dormant Company Accounts Service \u2013 only \u00a349.99<\/span><\/a>\n \n

Despite this, many business owners continue to file full financial statements when there\u2019s no need. Here, we\u2019ll take you through the alternatives available for dormant company accounts, along with the requirements you need to meet in order for your company to be viewed as dormant by both HMRC and Companies House.<\/p>\n

We’ll also explain the legal obligations you need to fulfil with regards a company being classified as dormant.<\/p>\n

Do Companies House and HMRC view dormancy in the same way?<\/h3>\n

The Companies House definition of dormancy is that it must have had \u2018no significant accounting transactions during the accounting period\u2019. So, for example, it cannot have generated income, or earned bank interest.<\/p>\n

Even if someone traded for a short time, they\u2019re active in the eyes of Companies House and will need to file a full set of accounts for the financial year.<\/p>\n

However, small dormant companies can claim exemption from audit or filing full accounts under section 480 of the Companies Act 2006<\/a>.<\/p>\n The company authentication code \u2013 your key to filing online<\/span><\/a>\n \n

HMRC is only interested in company activity if it\u2019s likely to lead to a Corporation Tax liability. It views a limited company as dormant up until the day it starts trading (no matter how long that takes), and there\u2019s no need to file tax returns. Once trading starts, HMRC needs to be informed within three months.<\/p>\n

If a company subsequently stops trading, it\u2019s classified as \u2018non-trading\u2019 by HMRC but \u2018dormant for Corporation Tax\u2019. HMRC will allow a company to remain in this state for up to five years.<\/p>\n

What makes a company \u2018dormant\u2019 for HMRC purposes?<\/h3>\n

A company is dormant if:<\/p>\n