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How to File Annual Accounts for A Dormant Company

Updated: Jan 6

Understanding Dormant Companies 

A company is considered dormant for Companies House if it has had no significant accounting transactions during the financial year. Significant transactions exclude filing fees paid to Companies House, penalties for late filing of accounts, and money paid for shares when the company was incorporated.


So If your business has no expenses or generates income, it can be classified as a dormant business. Ledger accounts with no expenses or income are not dormant accounts. Companies House describes a company as "dormant" if it has no "significant accounting transactions" during the accounting period. A significant accounting transaction is one that a company must record on its financial statements.


  1. Significant transactions do not include:

  2. Filing fees paid to Companies House

  3. Fines for late reporting

  4. Money was paid for shares when the company was set up


To file annual accounts for a dormant company in the UK, follow these steps which are similar to filing the annual accounts of an active company:


  • Prepare the Balance Sheet: A balance sheet is a statement of the company's financial position at a specific date and must show the company's assets, liabilities, and capital. The balance sheet for a dormant company is usually straightforward, as the company will have limited assets and liabilities.

  • Prepare the Profit & Loss Account: A Profit & Loss Account shows the company's revenue, expenses, and profit or loss over a specific period. Since a dormant company will have no trading activities, the profit and loss account will be blank.

  • File Confirmation Statement: A confirmation statement is a mandatory document that must be filed annually with Companies House. It confirms that the company information is up to date and includes details such as the company's registered office address, director details, and shareholder information.

  • File Annual Accounts: The annual accounts, which consist of the balance sheet and profit and loss account, must be filed with Companies House within 9 months of the company's financial year-end. The accounts must be filed electronically using the Companies House WebFiling service.

  • File a Dormant Company Accounts Form: If a company is dormant, it must file a specific dormant company accounts form (Form AA02) instead of the standard form for filing annual accounts.

  • Pay the relevant fees: Companies House will charge a fee for filing the annual accounts, which can be paid online. Dormant account registration is free, costs will only appear if the dormant company does not file a return on time, and penalties will apply. Failure to comply may result in a fine and, in the event of serious non-compliance, termination of the activity.


For an inactive company, this is relatively easy. The confirmation statement can be filed online for a fee of £13. The expiry date of the confirmation statement is the anniversary of the date of incorporation and is normally one year after the last filing. Following is a detailed guideline about filing annual accounts for a dormant company.


How to File Annual Accounts for A Dormant Company


If such a transaction does not take place, the company may have an inactive status. If a company is dormant and classified as 'small', it may file 'dormant accounts' and is not required to include an audit report with its financial statements. All public limited companies, whether incorporated or not, are required to file books with the commercial register. This includes dormant companies.


Overview and Importance of Compliance

Filing annual accounts for a dormant company in the UK is a statutory requirement that must be adhered to by all companies, including those that are inactive or dormant. It's crucial to understand that even dormant companies must file annual accounts with Companies House, as failure to comply can have serious consequences. The registrar may assume that the company is no longer operational and proceed to strike it off the register.


Financial Year and Accounting Reference Date (ARD)

The financial year for a company is usually a 12-month period for which the accounts are prepared. For existing companies, this period starts the day after the end of the previous financial year, and for new companies, it starts on the day of incorporation. The end of this financial year is known as the Accounting Reference Date (ARD). The first ARD is typically set as the last day of the month in which the company's first anniversary falls.


Changing the ARD

Companies have the flexibility to change their ARD. This can be done by filing online, using software, or sending a paper form AA01 to Companies House. However, this must be done before the filing deadline of the accounts for the period you wish to change. There are certain restrictions on extending the accounting reference periods, such as not exceeding 18 months from the start date of the accounting period.


Accounting Records Maintenance

All companies, regardless of their trading status, are required to keep accounting records. These records should include all money received and expended, assets and liabilities, and, if applicable, details about goods dealt with by the company. These records must be kept at the company's registered office or another suitable location, and if outside the UK, they must be sent to the UK at least every six months. Private companies must retain these records for at least three years, while public companies have a retention period of six years.


Preparation and Contents of Accounts

Every company must prepare individual accounts for each financial year. These accounts generally include a profit and loss account, a balance sheet signed by a director, notes to the accounts, and, if applicable, group accounts. The accounts should also include a directors' report and, in certain cases, an auditors' report. It's important to note that while professional accountants are not mandatory for preparing these accounts, directors are legally responsible for the accuracy and compliance of these documents.


Sending Accounts to Members

Companies are required to send a copy of their annual accounts to every member, every holder of the company’s debentures, and everyone entitled to receive notice of general meetings. Public companies must lay their accounts before members at an annual general meeting, while private companies have more flexibility in this regard.


Approving and Signing Accounts

The company’s board of directors must approve the accounts before sending them to the company’s members. This includes signing the balance sheet and directors' report, and if applicable, including the auditor's report. The signature on the balance sheet must include any exemption statements and the printed name of the director who signed it.


Filing Accounts with Companies House

Once prepared and approved, all private limited and public companies must file their accounts at Companies House. This includes dormant companies, which are allowed to submit simpler annual accounts. It's essential to remember that all information in the accounts becomes public record. Unlimited companies have specific conditions under which they need to file accounts with Companies House.


Filing with Other Regulatory Bodies

In addition to Companies House, companies might need to file their accounts with other regulatory bodies depending on their specific activities and sector. For instance, charitable companies have different requirements for filing their accounts.


Deadlines for Filing Accounts

The standard deadline for delivering accounts to Companies House is nine months from the ARD for a private company and six months for a public company. However, the deadlines for a company’s first accounts differ based on the length of the accounting period covered by those accounts. If a company changes its accounting period, new filing deadlines will apply.


Penalties for Late Filing

Late filing of accounts is a criminal offense and can result in civil penalties. The penalty amount varies depending on how late the accounts are filed and whether the company is private or public. Additionally, failing to submit accounts can lead to the company being struck off the register and dissolved.


Filing Accounts Online and on Paper Companies can file their accounts online, which is the quickest way to update information. The online filing service at Companies House can be used for dormant company accounts, micro-entity accounts, and small audit-exempt abbreviated accounts. Joint filing with Companies House and HMRC is also available for certain types of accounts. When filing on paper, specific requirements must be met, including signatures and company identification on the balance sheet and directors' report.


Accounts in Other Languages

If accounts are prepared in a language other than English, a certified translation into English must be included. For companies registered in Wales, accounts can be submitted in Welsh without an English translation. Companies can also send voluntary certified translations in an official language of the EU.



It's important to note that failure to file annual accounts on time can result in significant fines and legal penalties, so it's essential to make sure that all deadlines are met. Additionally, it is advisable to seek the assistance of a professional, such as an accountant, to ensure that all requirements are met and that the accounts are filed correctly.


Do Dormant Companies Need To File Annual Returns in the UK?

Yes, even dormant companies are required to file annual returns in the UK. The annual return is a form that must be filed with Companies House each year, and it provides basic information about the company, such as its registered office address, directors, and shareholders.


However, if the company is dormant and has not traded during the financial year, it may be able to file a simplified version of the annual return known as a dormant company account. This is a shorter form that confirms that the company has been dormant and has not carried out any significant accounting transactions during the financial year.


It's important to note that although a dormant company may not have any trading activity, it still has legal obligations to comply with under the Companies Act 2006, including the requirement to file annual returns or dormant company accounts, as applicable. Failure to comply with these obligations can result in penalties and potential legal action.


What is a Form AA02 and How Do We Fill An AA02 For a Dormant Company?

The AA02 form, specifically designed for dormant companies limited by shares, is used to submit dormant accounts to Companies House. It's applicable to companies which have never traded or those where the only transaction is the issue of subscriber shares. However, for periods beginning before 6 April 2008, an older version of the form from the National Archives website must be used​.



An AA02 is a form that is used to notify Companies House in the UK that a company is dormant. It is a simplified version of the annual return that can be filed by companies that have not traded during the financial year and have no significant accounting transactions.


The purpose of Form AA02 for a dormant company is to inform Companies House in the UK that the company is dormant and has not traded during the financial year. The form is a simplified version of the annual return and is used by companies that have no significant accounting transactions to report.


By filing an AA02 form, the directors of a dormant company are confirming to Companies House that the company has not traded or carried out any significant accounting transactions during the financial year. This is important because all companies in the UK are required to file annual returns or annual accounts, even if they have not traded.


Audit Exemption for Dormant Companies

Dormant companies can claim exemption from audit under certain conditions, as outlined in section 480 of the Companies Act 2006. A company is exempt from audit for the financial year if it has been dormant since its formation or since the end of the previous financial year, provided it meets certain criteria like being entitled to prepare individual accounts under the small companies regime and not needing to prepare group accounts.


Contents of Dormant Company Accounts

The accounts of a dormant company submitted to Companies House are much simpler compared to those of a trading company. They do not need to include a profit and loss account or directors’ report. Instead, they should contain:

  • A balance sheet with statements above the director’s signature affirming that the company was dormant throughout the accounting period.

  • Previous year’s figures for comparison.

  • Certain notes to the balance sheet.


Filing AA02 Form Online and Offline

The preferred method for filing dormant accounts is online, as it includes built-in checks and prevents common errors. This service is available for both companies limited by shares and companies limited by guarantee. However, if a company has been dormant since incorporation, it can also file a paper AA02 form, though this takes longer to process. The AA02 form isn’t suitable for dormant subsidiary companies or companies that became dormant after trading.


Deadlines for Filing Dormant Accounts

Dormant companies must adhere to the same filing deadlines as other companies. The same penalties for late filing also apply to dormant accounts.


Dormant Companies Starting to Trade Again

If a dormant company begins trading or has significant accounting transactions, it will no longer be exempt from audit as a dormant company. In such cases, the company may have to submit full accounts for the financial year in which it ceased to be exempt.


Exemption for Dormant Subsidiary Companies

A dormant subsidiary company may not have to file annual accounts at Companies House under certain conditions. This includes being dormant throughout the financial year and having its parent company established under UK law. If the exemption is claimed, it’s not necessary to prepare or send annual accounts to Companies House​.


Requirements for Exempt Dormant Subsidiaries

If a parent company files a package of supporting documents for its subsidiaries, it must include:

  • A written notice of agreement by the subsidiary’s members.

  • A statement of guarantee from the parent company (form AA06).

  • A copy of the parent company’s consolidated accounts.

This package must be delivered to Companies House before the subsidiary’s accounts due date​​​.


Claiming Audit Exemption for Subsidiaries

Under certain circumstances, a subsidiary may claim exemption from audit if its parent is established under UK law. This requires delivering to Companies House a written notice of member agreement, a completed form AA06, and a copy of the parent company’s consolidated accounts.


In summary, the process of filing annual accounts for a dormant company in the UK, particularly using the AA02 form, requires adherence to specific regulations and deadlines. The accounts must reflect the company's dormant status, and certain exemptions can be claimed under specific conditions. It's essential for companies to comply with these requirements to avoid penalties and ensure legal compliance. The next part of this article will delve into advanced considerations and practical tips for efficiently managing this process.


How Do I Fill an AA02 For a Dormant Company?

Filing an AA02 form for a dormant company helps Companies House to keep its records up to date and accurate. It also helps to ensure that the company is not subject to penalties for failing to file an annual return or annual accounts.

To fill out an AA02 for a dormant company, follow these steps:


  1. Download the AA02 form from the Companies House website.

  2. Complete the company details section, including the company name, registration number, and registered office address.

  3. Tick the box to confirm that the company is dormant and has not traded during the financial year.

  4. Complete the statement of the capital section, including the number and value of shares issued.

  5. Sign and date the form, and include the name and position of the person signing.

  6. Submit the form to Companies House by post or online.


It's important to note that although the AA02 form is a simplified version of the annual return, dormant companies are still required to file it with Companies House each year to avoid penalties and legal action.



How Do You Complete A Balance Sheet For A Dormant Company in the UK?

If you are completing a balance sheet for a dormant company in the UK, you will need to follow a few key steps. Here is a general guide on how to complete a balance sheet for a dormant company:


  1. Identify the company's assets: Even if a company is dormant, it may still have assets that need to be listed on the balance sheet. Common assets may include bank accounts, property, and equipment.

  2. List the assets: Once you have identified the company's assets, list them on the balance sheet. Assets should be listed in order of liquidity, with the most liquid assets (such as bank accounts) listed first.

  3. Determine the company's liabilities: If the company has any outstanding debts or obligations, these will need to be listed as liabilities on the balance sheet.

  4. List the liabilities: Once you have identified the company's liabilities, list them on the balance sheet. Liabilities should be listed in order of urgency, with the most urgent liabilities (such as unpaid taxes) listed first.

  5. Calculate the company's equity: The equity of a dormant company is typically the initial amount of money invested in the company by the shareholders. If the company has not issued any shares, then the equity may be listed as zero.

  6. List the equity: Once you have calculated the company's equity, list it on the balance sheet. The equity section should be listed at the bottom of the balance sheet, after the assets and liabilities.

  7. Balance the balance sheet: The balance sheet should always balance, meaning that the total value of the assets should equal the total value of the liabilities and equity.

  8. Review and file: Once you have completed the balance sheet, review it for accuracy and completeness. If everything is correct, file the balance sheet with Companies House, as required by law.


It's important to note that although a dormant company may not have any trading activity, it still has legal obligations to comply with under the Companies Act 2006, including the requirement to file annual returns or dormant company accounts, as applicable.


s Audit Mandatory For Dormant Company


Practical Tips for Filing Dormant Company Accounts in the UK


Key Considerations for Dormant Companies

When handling the accounts of a dormant company, it's essential to understand the definition and implications of being dormant. A company is considered dormant by Companies House if it has not had any significant accounting transactions during the accounting period. Such transactions do not include filing fees paid to Companies House, penalties for late filing of accounts, or money paid for shares when the company was incorporated. Despite being dormant for Corporation Tax purposes, a company must still file a confirmation statement and annual accounts with Companies House.


Director's Responsibility

Directors are legally responsible for ensuring that the company's accounts and reports are properly prepared and filed on time. This responsibility holds even if the company is not engaged in any business activity or receiving any income. It is crucial for directors to understand that compliance with Companies House requirements is mandatory, regardless of the company's operational status.


Filing Accounts Online: WebFiling System

Companies House offers a WebFiling system, a straightforward online template for submitting dormant accounts, especially for companies that have never traded. This system is available for companies limited by shares and companies limited by guarantee. It includes built-in checks to ensure all necessary information is included. Online filing ensures quick and efficient submission, helping to avoid common errors and omissions.


Penalties for Late Filing

Filing dormant accounts is free, but penalties are incurred if they are not filed on time. Late filing penalties underline the importance of adhering to deadlines. Companies and directors should be aware of these potential costs and the implications of non-compliance, which can extend to fines and, in severe cases, the striking off of the company from the register.


Filing Confirmation Statements

Dormant companies are required to file their confirmation statements online for a fee of £13. This statement is an essential part of annual compliance and ensures that the company's information on the register is up-to-date and accurate.


Resuming Trading Activities

If a dormant company restarts trading, it does not need to inform Companies House immediately. The change in status will be reflected in the next set of accounts filed, which will indicate that the company is no longer dormant. This flexibility allows companies to transition smoothly between dormant and active statuses without immediate reporting obligations.


Closing a Dormant Company

If a dormant company is no longer needed, directors have the option to close it using Companies House's online service. This process involves applying to strike off and dissolve the company, thus removing it from the register. This step should be considered carefully, as it involves the formal dissolution of the company.


In conclusion, managing the filing of annual accounts for a dormant company in the UK requires careful attention to compliance, deadlines, and ongoing obligations. Directors must be proactive in maintaining their responsibilities, utilizing online systems for efficiency, and understanding the implications of changes in the company's status. Regularly reviewing and updating company information, coupled with timely submissions, are key to ensuring legal compliance and avoiding unnecessary penalties. Through diligent management and adherence to regulations, dormant companies can effectively maintain their status and meet statutory requirements.


Is Audit Mandatory For Dormant Company in the UK?

In the UK, dormant companies are generally not required to have their accounts audited. This is because a dormant company, by definition, has not carried on any business activities during the financial year and therefore does not have any significant accounting transactions to report.


According to the Companies Act 2006, a company is dormant if it has had no significant accounting transactions during the financial year, such as trading or investments. If a company is dormant, it may be able to file abbreviated accounts, which contain minimal information and do not require an audit.


However, there are certain circumstances where a dormant company may still need to have its accounts audited. For example, if the company was previously active and then became dormant, it may still need to have its previous financial statements audited. Additionally, if the company is a subsidiary of a larger group, it may be required to have its accounts audited as part of the group audit process.


It's important to note that even if a dormant company is not required to have its accounts audited, it still has certain legal obligations under the Companies Act 2006, and failure to comply with these obligations can result in penalties and potential legal action.


What Happens If a Dormant Company Does Not File Annual Returns?

If a dormant company does not file annual returns in the UK, it may be subject to penalties and legal action. Under the Companies Act 2006, all UK companies are required to file annual returns or annual accounts, even if they are dormant.


If a dormant company fails to file its annual return, it will receive an automatic penalty from Companies House. The penalty starts at £150 and can increase up to £1,500, depending on how long the return is overdue. The penalty is also recorded on the company's public record, which may harm the company's reputation and credit rating.


If a dormant company continues to fail to file its annual return, it may face further penalties and legal action. For example, the Companies House may take enforcement action, such as striking off the company from the register, which can have serious consequences for the company's directors and shareholders.


It's important to note that even if a company is dormant, it still has certain legal obligations under the Companies Act 2006, and failure to comply with these obligations can result in penalties and potential legal action. Therefore, it's important for dormant companies to stay on top of their annual return filings and other legal obligations to avoid these consequences.



How a Tax Accountant Can Help a Dormant Company File Annual Accounts in the UK

In the UK, even dormant companies must adhere to specific legal requirements, including the filing of annual accounts. A tax accountant plays a crucial role in guiding dormant companies through this process, ensuring compliance and minimizing potential risks. Here's how a tax accountant can assist:


  1. Understanding Dormant Status: Tax accountants can help a dormant company understand what constitutes a dormant status for both Companies House and HMRC. They will clarify that despite being dormant for Corporation Tax purposes, the company must still file a confirmation statement and annual accounts with Companies House.

  2. Ensuring Compliance: They ensure that all legal requirements are met. This includes preparing and filing the necessary documents, such as the AA02 form for dormant companies, which is a simplified version of the regular accounts.

  3. Avoiding Penalties: Tax accountants help avoid late filing penalties by keeping track of deadlines. They can use their expertise to ensure that all documents are submitted on time, thus avoiding unnecessary fines.

  4. Navigating Online Filing: With the shift to digital, tax accountants are well-versed in using online platforms like the WebFiling system from Companies House. They can efficiently manage the submission process, ensuring that all necessary information is included and correct.

  5. Audit Exemption Advice: They provide guidance on audit exemptions applicable to dormant companies. This includes understanding the conditions under which a company can claim exemption from audit and ensuring that the accounts reflect the company's dormant status accurately.

  6. Confirmation Statement Filing: Tax accountants assist in filing the confirmation statement, which is a crucial annual requirement. They help in verifying and updating the company's information on the register, ensuring that it remains current and accurate.

  7. Advising on Resumption of Activities: If a dormant company plans to resume trading, a tax accountant can advise on the procedural changes and new filing requirements. They ensure that the transition from dormant to active status is reflected correctly in the company's filings.

  8. Closing a Dormant Company: If the decision is made to close a dormant company, tax accountants can guide through the dissolution process. This includes applying to strike off the company and ensuring all legal and financial obligations are settled.

  9. Record Keeping and Documentation: They assist in maintaining proper records and documentation even for dormant companies. This is crucial for audit trails and future reference, especially if the company becomes active again or faces legal scrutiny.

  10. Customized Advice: Every company’s situation is unique, and a tax accountant can provide personalized advice based on the specific circumstances and goals of the dormant company. This tailored approach ensures that the company's needs are adequately addressed.


By leveraging the expertise of a tax accountant, dormant companies in the UK can navigate the complexities of legal compliance with greater ease and confidence. This professional support is invaluable in maintaining the company's good standing and preparing it for any future business activities or decisions.


Conclusion

In conclusion, filing annual accounts for a dormant company in the UK requires careful preparation and attention to detail, to ensure that all necessary information is included and that deadlines are met.



20 Most Important FAQs about Filing Annual Accounts for A Dormant Company in the UK


Q1: What defines a dormant company in the UK?

A: A dormant company is one that has had no significant accounting transactions during the financial year.


Q2: Are dormant companies exempt from filing annual accounts?

A: No, dormant companies must still file annual accounts with Companies House.


Q3: Can a dormant company have any financial transactions?

A: Yes, but only transactions that do not affect the dormant status, like paying fees to Companies House.


Q4: What form is used to file dormant accounts?

A: The AA02 form is used for filing dormant accounts for companies limited by shares.


Q5: Is there a filing fee for dormant accounts?

A: Filing dormant accounts is typically free, but late filing can incur penalties.


Q6: What is the deadline for filing dormant accounts?

A: The deadline is usually 9 months after the accounting reference date for private companies and 6 months for public companies.


Q7: Can a tax accountant file dormant accounts on behalf of a company?

A: Yes, a tax accountant can assist in preparing and filing dormant accounts.


Q8: Are there any penalties for late filing of dormant accounts?

A: Yes, late filing can result in penalties, ranging based on the delay duration.


Q9: How can a company confirm its dormant status to Companies House?

A: By filing the required dormant accounts and a confirmation statement annually.


Q10: What happens if a dormant company starts trading again?

A: The company should file regular accounts for the financial year in which it resumes trading.


Q11: Can a dormant company be exempt from audit?

A: Yes, dormant companies can claim audit exemption under certain conditions.


Q12: How long must a company keep its accounting records?

A: Private companies must keep records for 3 years, and public companies for 6 years.


Q13: Is it mandatory for a dormant company to file a confirmation statement?

A: Yes, filing a confirmation statement annually is mandatory.


Q14: What should a dormant company do if it plans to close?

A: It can apply to strike off and dissolve via Companies House’s online service.


Q15: Does a dormant company need to file a Corporation Tax Return?

A: No, if HMRC has been informed of the company's dormant status, it's exempt from filing a Corporation Tax Return.


Q16: How are dormant company accounts filed online?

A: Through the WebFiling system provided by Companies House.


Q17: Can a dormant company hold assets?

A: Yes, but holding assets might affect its dormant status depending on their nature and use.


Q18: What constitutes a significant accounting transaction for a dormant company? A: Any transaction that the company should enter in its accounting records, except certain exempt transactions like Companies House fees.


Q19: Are there any specific guidelines for subsidiary dormant companies?

A: Yes, subsidiary dormant companies have specific exemptions and requirements for filing accounts.


Q20: Can a dormant company have a bank account?

A: Yes, but transactions in the bank account could change the company's dormant status.



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