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What are Dormant Accounts? File Dormant Company Accounts

If you have a UK-based enterprise then you must be familiar with the term “Dormant Accounts”. In this blog post, we are going to answer the question ‘What are dormant accounts?’ along with exploring the process of filing dormant company accounts. Before we rain on your parade, let's get the ball rolling!

What are Dormant Accounts? File Dormant Company Accounts

What are dormant accounts?

They are bank, business, or company accounts that have had no significant financial transactions/financial activity over a specific time period. According to the UK government, a corporation is considered dormant if it has ceased trading, because companies are required to file dormant accounts with Companies House, if:

  • No noteworthy transactions happened in the fiscal year.
  • Throughout the fiscal year, the firm did not operate.
  • The enterprise is not an exempted company.

Why does an account become dormant?

It happens for several reasons, the common of which is: The business temporarily ceases/halts its operations. This could be perhaps because of restructuring, seasonal fluctuations, or changes in market conditions; in which case the account remains open, but there are less or insignificant financial activities.

File dormant company accounts

If you feel like you meet the criteria for filing, you will have to prepare and file them with Companies House either online or by post. In the latter case, it can take a lot of your time. You can do it online through a reliable and affordable accountancy firm that provides Dormant Accounts services. Here is what you will include:

  • Company name and registration number
  • Statement of financial position
  • Notes to the accounts

Keep in mind, it still needs to comply with accounting standards, like the Companies Act 2006.

Below is an example of a inactive account’s balance sheet structure:

Balance Sheet | 30 April 2022


Data

£

Share capital called up but not paid 

1

Net Assets

1

Issued share capital

1

Ordinary share of £

1 Each

Total Shareholder Funds

1

Dormant company accounts filing requirements

According to Companies House, your firm is required to file within 9 months of the end of the fiscal year. It is important to file on time because if you fail to do so, it can result in fines and penalties to be paid to Companies House. 

Here is what you need to keep in mind:

  • Determine dormancy


It is important to check whether you qualify for it or not. 

  • Prepare financial statements


It is a requirement to prepare a financial statement; include a balance sheet, notes, and a director's report. 

  • Complete the CT600 form


It was not a requirement before but now it is important to complete the CT600 form which is used to report taxable profits or losses. It is compulsory to complete and submit the CT600 form to HMRC. 

  • Submit to companies house


Once your financial statements and CT600 form are ready, submit them to Companies House.

How do dormant accounts affect your UK-based company?

It can have various impacts, which can be both positive and negative:

Positive: It can help you in keeping your business's legal standing and avoiding fines or penalties for non-compliance.

Negative: Closing dormant accounts can harm your credit standing and increase the difficulty of getting credit or funding later on. Additionally, it could be more challenging to draw in partners or investors who would interpret them as an indication of unstable finances.

For businesses or companies in the UK, understanding and filing is very important, because it helps in maintaining transparency, compliance with legal obligations, etc. Being up-to-date can help you transform your company’s financial standing when it resumes its trading or overall operations. 

Visit our dormant accounts services page and let us help you file successfully. Get your business rolling – the proof is in the pudding!