You can save both time and money by closing down dormant business accounts.

a company that is not doing business or making money is referred to as a "dormant" company. HMRC sees this as inactive for Corporation Tax purposes, so it isn't doing anything. It also allows Companies House to receive abridged and unaudited accounts, known as "dormant company accounts," in certain cases.

Only £39.99 a month for a Dormant Company Accounts Service!

Many business owners, despite this, continue to file full financial statements even when they are not required to do so.. There are several options for dormant company accounts, as well as the requirements you must meet in order to be considered dormant by HMRC and Companies House.

Legal obligations for a dormant company will also be discussed.

Companies House and HMRC appear to disagree on the definition of "dormancy."

"No significant accounting transactions" are defined as dormancy by Companies House. Because of this, there was no way for it to generate income or earn interest for the bank.

In the eyes of Companies House, even if someone traded for a brief period, they are still considered active and are required to file a complete set of accounts for the fiscal year.

Section 480 of the Companies Act 2006 provides an exemption for small dormant businesses from auditing or filing full financial statements.

To file online, you must have the company's authentication code.

Companies' activities are only of interest to HMRC if they may cause a Corporation Tax liability. There is no need to file tax returns while a limited company is dormant (regardless of how long that takes). Within three months of beginning business, HMRC must be informed.

As soon as a business ceases operations, HMRC considers it "non-trading" for income tax purposes, but "dormant" otherwise. Only five years will be allowed for a company to remain in this state of affairs with HMRC.

In the eyes of the HMRC, what constitutes a "dormant" company?

if the following conditions are met:

• To put it another way, the company has stopped doing business and does not have any other source of income (like investments).
• When a new company is formed, tax returns are not required until the company has actually started trading.
• Corporation tax is not required because it is an unincorporated organisation run solely for the benefit of its members.
• Flat management companies may be considered dormant by HMRC at times.

See HMRC's official guidance on active and dormant activities for Corporation Tax purposes for more information.

What are the advantages of registering a business as dormant from an accounting perspective?

Companies that are both "small" and "dormant" are exempt from many of the requirements of reporting to Companies House, including the annual Confirmation Statement (previously known as a "annual return") and the unaudited, abridged balance sheet. It will not be required to submit a balance sheet or a report on the activities of the board of directors.

GOV.UK has a lot of information on dormant company accounts.

How can I inform HMRC that my business has shut down?

Please contact the Corporation Tax Department to inform HMRC that your company has gone dormant. Within three months of going dormant, you must carry out this task! Have your 10-digit Unique Tax Reference ready when you call.

For Companies House, what does "dormant" mean, and when is a company exempt from audits??

There is no need to file an annual Confirmation Statement (formerly known as a 'annual return') even if your company is inactive for Corporation Tax and Companies House.

You can file dormant company accounts without an auditor's report if your company is dormant according to Companies House and also qualifies as a small company.

There must be at least two of the following conditions met for a company to be classified as "small."

• A little over £10 million a year is the company's revenue.
• It has a net worth of under £5.1 million.
• It has a workforce of less than 50.

Then you can do as follows:

• In order to avoid an audit, take advantage of the exemption.
• The director's report and profit and loss statement can be sent to Companies House or not.
• Notify Companies House of abridged financial reports.

Company tax returns still require statutory accounts to be sent to shareholders and HMRC.