Before reporting your business as inactive, you must ensure that all outstanding invoices have been paid, including directors` salaries, employee salaries, dividends to shareholders, direct debits for service providers, and all accounts payable. If your business owes money to customers, you should settle those accounts. The payment of shares and guarantees is not classified as a significant accounting transaction because these fixed amounts of capital are present when the dormant company is incorporated. The accounts of a dormant company should only include the following: While point 1 above is pretty obvious and unlikely to cause problems, you should be careful with points 2 and 3 to avoid triggering a large accounting transaction. This may be the case if the amounts claimed require payment from an account: if there are costs involved in the payment, such as a fee for processing a check, these costs, no matter how small, are considered a significant accounting transaction and would cause the company to lose its dormant status. If you are registered for VAT, you must cancel this registration as well as the payslips and settle all outstanding debts of your company. During this time, the Company must not generate any transactions, otherwise you must submit full accounts to Companies House and face all liabilities that such transactions may entail. If you`re looking to start a business, try our partner 1st Formations – Britain`s leading training company. The following common scenarios illustrate how careful a dormant company must be to avoid large accounting transactions: In order to maintain its dormant status, a shareholder or guarantor company must at no time carry out “significant accounting transactions” through its accounts.

To learn more about depositing inactive accounts and our services, click here. When a company is created, the very first shareholders – often called underwriters – usually pay something for their shares or agree to pay something. The company must take this into account. Thus, if four initial underwriters each pay £1.00 for a £1.00 share, the company would have a paid-up capital of £4.00. This would be represented by an asset, which is usually recorded as cash of £4.00. Receiving this £4.00 would not be a significant accounting transaction and dormant business status would not be threatened. Companies House still requires dormant corporate accounts each year, just as they are required for an active business. These must contain a report with all relevant comments and be submitted no later than 9 months after the deadline (ARD). The DRO is the end of the company`s fiscal year, usually the last day of the month following the creation of your business. Unless HMRC sends you a “Corporation Income Tax Notice”, you do not need to file a Corporation Income Tax Return or Financial Statements with HMRC until your business begins operations. The annual confirmation statement is a document that confirms important details of the business on a specific date, including: A dormant company cannot engage in any business activity or receive any form of income, including: Below we look at these different definitions at Companies House and HMRC, the filing requirements of a dormant company, and the most common reasons why businesses become inactive.

There is no need to notify Companies House immediately when your dormant business takes action. They will inform the status of active trading when the next financial statements are filed. Dormant companies must also ensure that legally required records are kept up to date and made available to the public for inspection at the head office or SAIL address. Your start-up function is becoming more and more valuable According to Companies House, a dormant business is classified as having no “significant” transactions in the fiscal year you would normally report. By leaving your limited liability company dormant, you can avoid much of the cost of maintaining your business and you don`t have to go through the administrative process of closing your limited liability company. All other types of payments made or received are considered “significant accounting transactions that would jeopardize the status of a dormant business and require the submission of full legal accounts”.