One of the most common questions we hear from directors of inactive companies is some variation of: “Do I really need to do anything? Nothing happened this year.” The answer, frustratingly, is yes. Dormant company accounts cost money to prepare and file, but the cost of not filing is considerably higher.

The UK has a straightforward rule: if your company is registered at Companies House, it must file annual accounts — dormant or otherwise. The accounts themselves are simpler than a trading company’s, but the obligation is real, and the penalties for missing the deadline are on a sliding scale that escalates quickly.

In this post, we walk through what dormant accounts actually involve, what you can expect to pay an accountant to handle them, and where the process can quietly go wrong for directors who assume it’s too simple to bother with professional help.

For Companies House purposes, a company is dormant if it has had no “significant accounting transactions” during the financial year. That means no sales, no purchases, no salaries paid — essentially, nothing that would normally appear in a profit and loss account. Holding a company open while you plan a future venture, or keeping a historical company alive for brand or IP reasons, are both common situations where dormant status applies.

HMRC uses a slightly different definition. A company can be dormant for Companies House purposes but still have a corporation tax obligation if it received bank interest, paid costs that were chargeable to tax, or had any income during the year. Most genuinely dormant companies will want to notify HMRC that the company is dormant too — otherwise, HMRC may issue a tax return notice regardless.

The practical upshot: dormant status doesn’t mean zero paperwork. It means less paperwork than a trading company, but not none. The accounts filed with Companies House will be a simplified balance sheet showing the company’s share capital and any liabilities, with no profit and loss statement, directors’ report, or auditor’s report required. That simplicity is useful — but the filing deadline still applies.

Dormant accounts are, by design, brief documents. Because there’s no trading activity to report, there’s no profit and loss statement to prepare. What you do need is a balance sheet showing the company’s position — typically just the share capital paid in and any assets or liabilities on the books.

A director must formally approve the balance sheet, and their name must appear on the filed accounts. That approval matters: it’s a legal confirmation that the accounts are accurate, so it’s worth having someone check them before you sign off.

For most genuinely dormant companies, the balance sheet will show only the initial share capital (often £1 or £100 for a standard incorporation) and nothing else. It’s a short document — but it still needs to be filed in the correct format and submitted to Companies House before the deadline.

Alongside the dormant accounts, most companies will also need to file a confirmation statement each year, which confirms that the basic company information held at Companies House is up to date. That’s a separate filing with its own fee. The two are often confused, but they’re distinct obligations. If HMRC also needs to be notified or a nil corporation tax return filed, that’s a further step — one that a good accountant will handle as part of the process rather than leaving you to deal with separately.

The dormant company accounts cost varies depending on whether you handle it yourself or use an accountant.

DIY filing

Companies House allows dormant accounts to be filed online through their WebFiling service at no charge (beyond the annual confirmation statement fee of £34 online as of the current filing year). If your company’s affairs are genuinely simple — one share issued, no liabilities, no assets beyond that share capital — the DIY route is technically possible. The challenge is knowing whether your company’s position really is that clean, and whether you’ve correctly notified HMRC of dormant status. Directors who skip that step sometimes receive unexpected correspondence from HMRC later.

Using an accountant

For a professional to prepare and file your dormant accounts, you’d typically expect to pay somewhere between £50 and £150 depending on the firm. At Wings Online Filings, our fixed fee for dormant company accounts is £50 — that covers preparation of the dormant balance sheet, filing to Companies House, and making sure HMRC is notified of the dormant status where required.

For most directors, spending £50 to have it done correctly and on time is straightforward value. The alternative — filing late, filing incorrectly, or missing the HMRC notification — carries real financial risk that quickly outweighs the saving.

This is where the dormant company accounts cost conversation gets more serious. Companies House applies late filing penalties to dormant accounts in the same way it does to trading company accounts. The penalty scale for private limited companies runs as follows:

• Up to 1 month late: £150
• 1 to 3 months late: £375
• 3 to 6 months late: £750
• More than 6 months late: £1,500

Those penalties double for companies that file late in consecutive years. So a director who misses the deadline two years in a row and files three months late each time is looking at £750 in penalties for those two years alone — for a company that did nothing.

Companies House is not generous with appeals on late filing, and “I didn’t know I had to file” is not accepted as reasonable cause. The accounts deadline for a private limited company is nine months after the financial year end, so the date is predictable and the notice is long.

The most sensible financial decision for most dormant company directors is to spend the small fee to have accounts filed correctly and on time each year, and to keep the company on the right side of Companies House without it ever becoming a problem. The numbers make the case clearly.