Dormant Accounts – Do I Need to File Accounts for a Dormant Company?
Many people in the UK register their limited company and then some end up closing the company and some companies go dormant for many reasons. The interesting thing is that people make their companies dormant accounts alive purposely. This involves various guidelines and maturity by which one person makes the decision to turn his company dormant. Now the question someone can ask is “do I need to file accounts for a dormant company?” The answer is yes if you want to. There are reasons for people to file accounts for a company but they have to follow the rules held by HMRC and there is no space for any mistakes.
Understanding a Dormant Company
The dormant company is the condition of a company somewhere between opened and closed. It’s a situation when a company is not operational but is not closed as well. This is like a hibernate situation for a company. The owners take this step for various reasons.
While being dormant, the company shouldn’t have any significant transaction. Otherwise, the company will have to submit the statutory accounts and file for a tax return after paying full tax for a running company.
- Significant Transactions: significant transactions are the financial exchanges within a company in the form of income or expense. There are some exceptions for these transactions though.
- The fee that is paid to HMRC for filing.
- Any transaction for the penalties issued by HMRC
- The starting transaction of a company at the time of incorporation.
These transactions only are out of significant context and cause no additional penalty or problem.
Reasons to File a Dormant Accounts
There are many reasons to do so but some are exceptionally important and make sense for the owners to take this decision. Some of the reasons are as follows;
- The owner wants to keep the company dormant while preparing for the launch of the company.
- Someone is planning to restructure the former business while keeping the company dormant.
- The owner may need a break from the company’s operations due to any illness or occasion.
The process to Do It
If you want to make your company dormant and you have no clue how to file accounts for a dormant company, then you should contact the accountant for a contractor who is working for a reputable umbrella company and can assist you through the process or you can go through the guidelines for filing the accounts available on the official website.
If you have decided to make your company dormant accounts, then you must fulfil the requirements ruled by HMRC. You may need to hire business accountants to file for the following with the Companies House.
- Submit form AA02 annually for dormant company accounts online.
- Submit the confirmation statement annually.
- Submit an annual notification to HMRC that you are filing accounts for your dormant company.
For any help of advice regarding dormant accounts or don’t know how to file how to file accounts for a dormant company, contact us