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Filing of Dormant Accounts in UK

Required by law, all UK limited companies need to file documents with Companies House in order to comply with UK Companies Act and for the company to exist. All companies in the UK must ensure they are submitting their accounts to Companies House every year. But it filing of accounts will also be dependent on the fact whether a company has traded or not. So in case if a company has not traded there would be a need to file accounts for it as a dormant Company. Usually the dormant accounts provide Companies House with a confirmation that the company has not been into trading. On the contrary, in case the company has not traded, a person would be required to file trading accounts.

Significance of filing Dormant Accounts

For any company, its accounts due for filing should be done on the last date of an anniversary month. Say for instance, any company incorporated on 15 May 2017, will have its accounts due for filing on the 31 May 2018. There will be a time frame of 9 months from the Accounts due date (31 May 2018) to file accounts on time. The failure of not being able to file within the aforementioned period will mean a company will lose its goodwill and incur penalties also.

Complete Process of Filing of Dormant Accounts

All dormant companies need to prepare dormant accounts and confirmation statements for Companies House on a yearly basis. Accounts can consist of balance sheets and notes required. This can be then delivered to Companies House by either post or by using the online AA02 form. Deadline to file accounts is 9 months after end of the financial year and that is what we also called as accounting reference date.

But for those who are filing their company’s first accounts they can take a period of 12 months and the deadline would be 21 months from the date of incorporation. Herein, Companies House notifies one of of the filing dates well in advance.The annual confirmation statements also known as the ‘annual return’ is a document laying key details of a company at a certain date, including:

  • Name of the company
  • Registered office location
  • Details of the Director and Secretary
  • Details of shareholders
  • Statutory company records and their location
  • Issued shares and their details
  • Business activities and their nature
  • Key people and their information

With everything in place, company’s first confirmation statement has to be delivered in 12 months after the incorporation date. After that subsequent statements which are due 12 months after date of the previous statement to be considered. However, here there is no limit on number or frequency of statements filed in the year. Here the entire purpose is of confirming is to ensure important details and the public register is up-to-date and accurate. For companies tagging themselves as dormant, it is quintessential to ensure statutory records are kept up-to-date & made available for public inspection at SAIL (Single Alternative Inspection Location) address or a registered office. Companies House must be kept in the know how as and when changes to the registered details of a company are made. On this account, the public record would also be updated.

Complying with HMRC

Company Tax Return needs to be filed with HMRC by all dormant companies. This has to be done if they were trading prior to becoming dormant. For those companies which are dormant from date of incorporation they do not need to file any tax returns till the time they don’t become active again. Once the patrons have gone ahead and informed the local corporation tax office that trading has stopped; a ‘Notice to deliver a Company Tax Return’ is received. This should be completed for covering the period of activity before the company became dormant and to work out also on the amount of corporation tax owed by company, in a case be scenario. Apart from this tax return, the dormant company now should have no further obligation to contact HMRC, till the trading does not commence or the business is not dissolved.

Procedure for making a company dormant

Registering a new company as dormant or changing the company’s trading status from active to dormant must be done by getting in touch with the local corporation tax office in writing. Here the details should be furnished, mentioning the date when or at what time the company intends to go dormant. The contact details of the local corporation tax office can be found on any official letter from HMRC that has been delivered to one’s registered office address. Or on the other hand, one can just locate the nearest tax office. In approximately a time span of 15 days, a notification will be delivered at the registered office address accepting of the dormant status of the company.

How to File Dormant Accounts with Companies House?

In cases where a company is previously trading, the HMRC will send a ‘Deliver a Company Tax Return Notice’ once the local corporation tax office has been contacted. All such formalities should be completed for the corporation tax accounting period before the dormant status comes into the picture. This must be delivered to HMRC online along with payment of any corporation tax owed, if a profit was made during that period. Wherever applicable, cancellation of the payroll and the VAT registration should also be done.

All outstanding bills should be paid like salaries of directors, wages of employees, dividends due to shareholders, service providers and their direct debts and all supplier accounts before declaring a company as dormant. In situations where money is owed from clients, arrangements should be made to settle such accounts.

Bringing a dormant company back to life

If the time comes and someone wants to make their dormant company active once again, the HMRC needs to be intimated prior anytime in the 3 months of business activity or receiving of any income. In circumstances, if acompany has not traded on a prior basis it must be registered for corporation tax online and here inone would be required to form a Government Gateway Account. The following mandatory information would need to be furnished to the HMRC:

  • Name of company
  • Company Registration Number (CRN)
  • Date of company’s activation (Applying Corporation tax from day accounting period started)
  • Location of principal business activities
  • ARD (Accounting reference date) referring to date on which company accounts are prepared
  • Application of Standard Industrial Classification (SIC) code (It signifies main business activities)

This information would be saved by HMRC in their e-records and would come in handy for working out the company’s accounting period and the corporation tax applicable on it. It will run from date trading would start and going up until the accounting reference date (ARD) of the annual accounts of the company. Those mentioned as in the documents and entitled to business by the company would receive a letter containing company’s deadlines for paying corporation tax and filing Company Tax Returns at the registered office address. Up to date and correct business & accounting details and records would be required to work out tax liabilities and complete tax returns. If the need be an accountant or a tax advisor can also be appointed to help in such matters.

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