Understanding Dormant Company Accounts
If you’re a business owner in the UK, you may have heard of the term ‘dormant company’. A company is considered dormant by HM Revenue and Customs (HMRC) if it hasn’t carried out any ‘significant’ trading activities during the financial year. This could be due to various reasons such as business restructuring, holding assets, or protecting a company name. But the question that often arises is: “Do I need to file dormant company accounts?” The answer is yes. This blog post aims to provide you with a comprehensive guide on this subject.
Why You Need to File Dormant Company Accounts
Even if your company is dormant, it is still a legal entity and thus must comply with certain obligations under the Companies Act 2006. These include filing dormant company accounts with Companies House. Failure to do so can result in penalties and fines.
According to HMRC, as of 2024, you could be fined up to £1,500 for late filing.
Keeping Your Company’s Status Up-to-date
Filing your dormant company accounts also ensures that HMRC and Companies House are aware of your company’s current status. This could save you from unnecessary inquiries or investigations.
Preventing Unwanted Dissolution
If a company fails to file any accounts or confirmation statements for a certain period, it is assumed to be no longer in operation. This could lead to the company being struck off the register and dissolved. By filing dormant accounts, you’re confirming that your company is still in existence, even if it’s not currently trading.
How to File Dormant Company Accounts
The process of filing dormant company accounts is simpler than filing usual company accounts. Here’s a step-by-step guide:
- Prepare a balance sheet with notes. This should detail the company’s assets and liabilities.
- Submit the accounts to Companies House. This can be done online or by post.
- Ensure to file your accounts every year, even if your company remains dormant.
Remember, the deadline for filing dormant company accounts is nine months after the company’s accounting reference date (ARD). The ARD is the end of the financial year for your company, and this date is initially set by Companies House when your company is incorporated.
Conclusion
In conclusion, if your company is dormant, you still need to file dormant company accounts. This not only helps you avoid penalties and fines but also keeps your company’s status up-to-date and prevents unwanted dissolution.
While the process of filing these accounts is simple, it can be time-consuming. Therefore, consider seeking professional help if needed.
Further Resources
For more detailed instructions on how to file dormant company accounts, visit the HMRC website.
