One small monthly bank service charge can end a UK company's entitlement to file dormant accounts — Companies House applies no minimum threshold. Whether the company has made its first sale is not the test.
In this guide, we discuss what the rules mean for a UK company dormant before trading. We cover the Companies House significant-transaction test, HMRC's separate Corporation Tax position, common pre-launch payments, and continuing filing duties.
What Makes a UK Company Dormant at Companies House?
Dormancy at Companies House depends on whether the company had a significant accounting transaction during the financial year — not on whether it has started selling.
Under section 1169 of the Companies Act 2006, a company is dormant when it has had no significant accounting transaction in the relevant financial year. A significant accounting transaction is one that should be entered in the company's accounting records. The test looks at the ledger, not the sales pipeline, so a pre-trading company can still fail it.
Companies House guidance lists the narrow statutory exceptions. Subscriber-share payments, fees for a change of name, re-registration or a confirmation statement, and late accounts-filing penalties do not count as significant transactions. These categories should be applied precisely — a formation package is not exempt as a whole.
The test is applied year by year, for the financial year in question. A company dormant in its first year may not be dormant in its second. This position is entirely separate from HMRC's Corporation Tax view, which the next section covers.
How Does HMRC Decide Whether a Dormant Company Is Active?
HMRC applies its own test, based on business activity rather than accounting entries, so the two regulators can reach different conclusions about the same company.
According to HMRC, a company is generally active for Corporation Tax when it carries on business activity, trades, provides services, earns interest, manages investments or receives other income. HMRC's guidance states that its active and dormant definition is not necessarily the same as the Companies House definition. A Companies House filing result therefore does not automatically determine the Corporation Tax result, and vice versa.
HMRC also recognises preliminary activities. Expenditure connected with deciding whether to start a business, and similar preparatory steps, can occur without the company being treated as having started trading. This is not a blanket safe harbour — subscriptions, banking activity, contracts and customer receipts each need their own review.
Whether a particular pre-launch event amounts to business activity depends on the facts. A founder planning a tutoring business in the United Kingdom may research the market and incorporate without triggering tax activity. Accepting a first paying customer under a live contract is a different matter.
Companies House vs HMRC Dormancy Tests
| Aspect | Companies House | HMRC Corporation Tax |
|---|---|---|
| What is tested | Whether the company had a significant accounting transaction in the financial year | Whether the company is active — trading, providing services, earning interest, managing investments or receiving income |
| Statutory exceptions | Subscriber-share payments, specified change-of-name, re-registration and confirmation-statement fees, and late accounts-filing penalties | None in the same form — the question is whether business activity has begun |
| Effect of a bank charge | Usually breaks dormant-account eligibility | Usually preparatory — the company can remain dormant |
| Possible outcome | Full statutory accounts required | Company still treated as not yet active |
Which Pre-Launch Payments Break Companies House Dormancy?
Most routine setup costs sit outside the statutory exceptions. Each answer turns on the invoice, the contracting party and who bears the charge.
Whatever the reasons behind why set up a company in the United Kingdom, the invoices generated on the way to launch decide the dormancy position. The team's professional judgement starts with the invoice, contracting party and company liability. The fact-dependent items are flagged below.
1. Formation Agent Fee
Split the invoice. The statutory Registrar-fee exceptions do not include an incorporation fee; if the company reimburses it, assess whether an accounting entry is required. An agent's professional or formation-service charge borne by the company will normally require an accounting entry instead. This is a fact-dependent reading, based on the invoice, the contracting party and who ultimately bears the charge.
2. Registered Office and Secretarial Service Fees
These fees are owed to a service provider, not the Registrar of Companies, so they generally prevent dormant accounts being filed. The invoice, the legal obligor and any reimbursement position should be reviewed before concluding.
3. Identity-Verification Charges
Direct identity verification with Companies House is free. If an authorised corporate service provider (ACSP) charges and the company bears the cost, it is generally a private service fee. It is not normally a Registrar fee or statutory exception. Review the invoice and legal obligor before deciding.
4. Software Subscriptions and Bank Charges
A monthly bank service charge is enough to prevent dormant accounts, because Companies House applies no minimum threshold. Software subscriptions follow the same logic and are a common early trigger.
5. Director-Funded Setup Costs
A director paying personally does not automatically place the cost outside the company. Where the company incurred the cost or owes reimbursement, it will normally record an entry. That entry debits the expense and credits the director's loan account. It is a significant transaction even before a bank account opens. Pre-incorporation invoices need care, because a company cannot contract before it exists. If the founder bears a cost personally, has no reimbursement right and does not recharge it, there may be no company entry. Each case rests on the invoice, proof of payment, any board minute and a loan-account reconciliation.
6. Customer Deposits
A deposit recorded as a contract liability rather than revenue is still an accounting transaction. It is also a strong, fact-sensitive indicator that commercial activity has begun for HMRC. The signed contract, refund terms and what has actually been delivered should be examined before deciding.
7. Foreign-Currency Conversion
Conversion generally requires an accounting entry where funds are exchanged, a conversion charge is incurred or an exchange difference is recognised. A displayed sterling equivalent alone is not necessarily a separate transaction. This is a bank-record and ledger assessment rather than a categorical rule.
Pre-Launch Transactions and Their Dormancy Impact
| Transaction | Companies House treatment | HMRC Corporation Tax view |
|---|---|---|
| Formation agent's service charge | Significant if borne by the company — not a Registrar fee | Preparatory; company usually remains dormant |
| Registered office or secretarial fee | Generally prevents dormant accounts | Preparatory; company usually remains dormant |
| Paid identity-verification fee | An ACSP's charge is not a Registrar fee | Preparatory; company usually remains dormant |
| Software subscription | Significant accounting transaction | Fact-dependent — review the purpose |
| Bank service charge | Significant — no minimum threshold | Usually preparatory |
| Director-funded cost with reimbursement | Significant — enters the director's loan account | Fact-dependent |
| Customer deposit | Significant, even as a contract liability | Strong indicator activity has begun |
| Currency conversion with a charge | Significant where funds are exchanged | Fact-dependent — part of activity if linked to trading |
What Must a UK Company File Once Dormancy Is Broken?
Full statutory accounts replace dormant accounts for any financial year containing a non-exempt transaction, and the confirmation statement continues regardless.
Dormant accounts are available only where the company is dormant for Companies House purposes in that period. One non-exempt transaction in the financial year removes the option, and every company — active or dormant — must still file annual accounts each year.
1. Dormant Accounts
A company that is dormant for Companies House purposes and qualifies as small can file simplified dormant accounts at Companies House. The option applies only to financial years with no significant accounting transaction outside the statutory exceptions.
2. Full Statutory Accounts
Once a non-exempt transaction exists, the company prepares the applicable statutory accounts instead. A micro-entity or small-company framework is often available, but eligibility must be checked against the size thresholds rather than assumed.
3. The Confirmation Statement
The confirmation statement remains due at least once every 12 months, whether the company is dormant or not. The first review period ends 12 months after incorporation, and the statement can be filed up to 14 days after that date. Filing early sets a new confirmation date. The online filing fee is £50 from 1 February 2026. An HMRC dormancy notification does not remove this obligation.
4. Accounts Deadlines
First accounts of a private company are generally due 21 months after incorporation, and later accounts generally nine months after each financial year end. The first accounting reference date is normally the last day of the incorporation month, one year on. It can be changed before the relevant filing deadline, subject to the applicable rules.
Filing Timeline After UK Incorporation
| Filing or event | Timing | Dormancy relevance |
|---|---|---|
| First accounting reference date | Last day of the incorporation month, one year on | Sets the first financial year; can be changed before the filing deadline |
| First confirmation statement | Review period ends 12 months after incorporation; file within 14 days after | Due whether dormant or active |
| First accounts (private company) | Generally due 21 months after incorporation | Dormant accounts only if no non-exempt transaction |
| Later accounts | Generally due nine months after each financial year end | Same dormancy test each year |
| HMRC active notification | Within three months of the accounting period beginning | Only once the company becomes active |
| Company Tax Return | 12 months after the accounting period ends when a notice is issued | Tax payable nine months and one day after period end |
Dormant Versus Active: The Filing Picture
| Obligation | Dormant company | Active company |
|---|---|---|
| Companies House accounts | Dormant accounts (where eligible) | Full statutory accounts |
| Confirmation statement | Still due each year | Still due each year |
| HMRC notification | Dormancy can be notified to HMRC | Active status notified within three months |
| Company Tax Return | Only if HMRC issues a notice — file a return for the period, including a dormant period | Legally required on notice; due 12 months after the period |
| Corporation Tax payment | None while dormant | Generally nine months and one day after the period |
When Does HMRC Need to Be Told a Dormant Company Is Active?
Tell HMRC within three months after the company becomes active for Corporation Tax. This is separate from Companies House filings.
HMRC must be notified within three months of the company becoming active and coming within the charge to Corporation Tax. This is separate from Companies House filing. Not every accounting transaction means activity has begun, so the commencement date is a facts-first judgement. Accepting a first commercial order or deposit, starting another business activity or receiving taxable investment income can indicate that activity has started.
A Company Tax Return becomes legally due when HMRC issues a notice to deliver one. A notice should never be ignored. Where the company was dormant for the period and has received a notice, it must file a Company Tax Return to show HMRC that it was dormant. When a return is due, it is normally filed within 12 months after the end of the accounting period. Corporation Tax is generally payable nine months and one day after that period ends.
A Corporation Tax accounting period cannot exceed 12 months. Where the statutory accounts cover a longer stretch of active trading, more than one Company Tax Return may be needed. The first active period and the Companies House financial year can differ, so dates should be checked in the company's HMRC account or with an adviser.
Eligible pre-trading expenses incurred no more than seven years before the trade begins can be treated as incurred on the start date under section 61 of the Corporation Tax Act 2009. The conditions are that the expense was for the trade and would have been deductible if incurred on that day. This tax treatment does not erase the underlying accounting transaction, so it does not preserve Companies House dormancy.
Once activity begins — for instance when selling services overseas from a UK company — VAT registration thresholds also deserve a check. Founders unsure where their own facts sit can contact our team for a transaction-by-transaction review before the filing deadlines arrive.
Conclusion
Dormancy is decided in the ledger, not in the sales report. A UK company dormant before trading keeps its dormant-accounts position only while every transaction in the financial year falls within the narrow statutory exceptions. Bank charges, service fees, software subscriptions, director loans and customer deposits each tell a different story, and each needs its own review.
The two regulators also answer the dormancy question separately. Companies House looks at significant accounting transactions, while HMRC looks at business activity, so a company can file full accounts while remaining dormant for Corporation Tax. The confirmation statement and accounts deadlines continue either way.
3E Accounting United Kingdom helps founders and overseas owners review pre-launch transactions, prepare the correct set of filings, and manage the transition from dormant to active. To discuss a specific set of facts, get in touch with our UK corporate services team.
Review Your Company's Dormancy Position
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Frequently Asked Questions
Only where each payment falls within the statutory exceptions — share payments on incorporation, Registrar of Companies fees and Companies House late-filing penalties. An agent's service charge, a registered-office fee or a software subscription borne by the company will generally require an accounting entry and end dormant-account eligibility for that year.
Yes, generally. A monthly service charge is an accounting transaction that belongs in the company's records, and Companies House applies no minimum threshold. Even a small fee removes the option of dormant accounts for the affected financial year.
Often, yes. If the company incurred the cost or owes the director reimbursement, the entry is a debit to the expense and a credit to the director's loan account — even before a bank account opens. Pre-incorporation invoices need extra care, because a company cannot contract before it exists.
For Companies House, a deposit is a significant accounting transaction even when recorded as a contract liability rather than revenue. For HMRC it is a strong, fact-sensitive indicator that commercial activity has begun, so the contract and refund terms should be reviewed before deciding.
No. Dormancy at HMRC does not cancel the Companies House obligations. The confirmation statement and annual accounts — dormant or full — remain due, and a company can be struck off the register for failing to file them.
Abigail Yu
Director
Abigail Yu oversees executive leadership at 3E Accounting Group, leading operations, IT solutions, public relations, and digital marketing to drive business success. She holds an honors degree in Communication and New Media from the National University of Singapore and is highly skilled in crisis management, financial communication, and corporate communications.
