Dormant Accounts

What are dormant accounts?

Here's a simple guide to what dormant accounts are:

1. Definition: Dormant accounts refer to accounts held by companies that have not had any significant transactions or changes in a particular financial year.
   
   

2. Legal status: Even though a company is considered dormant, it still exists as a legal entity and must comply with certain legal obligations.
   
   

3. Reporting requirements: Dormant companies are exempt from some of the normal reporting requirements, such as filing full annual accounts or having an audit of their accounts. However, they are still required to file annual accounts and a confirmation statement with Companies House.
   
   

4. Maintenance of records: It is important for dormant companies to maintain accurate records of their financial transactions, even if they have not had any significant transactions or changes.
   
   

5. Resuming business activities: A dormant company can resume business activities at any time and must be in a position to comply with any regulatory requirements when it does so.

File Dormant Accounts

Here's a simple guide to filing dormant accounts in the UK:

1. Prepare your annual accounts: Dormant companies are still required to prepare annual accounts, which must include a balance sheet and a statement of financial position.
   
   

2. File a confirmation statement: A confirmation statement must be filed annually, even if the company is dormant. This statement confirms that the information held by Companies House about your company is up to date.
   
   

3. File your annual accounts: You must file your annual accounts with Companies House within nine months of your company's financial year-end. Dormant companies can file abbreviated accounts, which are a simplified version of the full accounts.
   
   

4. Pay the appropriate fees: There is a fee for filing your annual accounts and confirmation statement with Companies House. The fees vary depending on the type of filing and the method you choose (online or paper).
   
   

5. Keep accurate records: It's important to keep accurate records of your company's financial transactions, even if the company is dormant. This will make it easier to file your annual accounts and respond to any queries from Companies House or HM Revenue and Customs.
   
   

Note: If your company is dormant and has been so for a number of years, you may be eligible to have it struck off the register. This will involve a process of filing certain documents with Companies House, so it's important to seek professional advice if you are considering this option.

Dormant Accounts Example

Here is an example of a set of dormant accounts for a UK company:

1. Balance Sheet:

Assets:

• Cash in bank: £400

• Prepaid expenses: £200
  
  

Liabilities:

• Accounts payable: £100

Owners' Equity:

• Capital: £500
  
  

2. Statement of Financial Position:
   
   

Revenue: £0

Expenses: £0

Net income: £0

This example shows a dormant company with a very basic set of accounts. The company has a small amount of cash in the bank and some prepaid expenses, but has not had any significant transactions during the financial year. The company has no revenue or expenses, and therefore has a net income of £0. 

This set of accounts would be considered abbreviated accounts and would be filed with Companies House as part of the company's annual reporting requirements.