Do I have to file dormant accounts with HMRC?

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Technically you don’t have to file dormant accounts with HMRC. You file “Dormant Accounts” with Companies House, not HMRC.

However, there is a catch. You must formally tell HMRC that your company is dormant (inactive). If you don’t tell them, their computer assumes you are still trading. It will demand a full Company Tax Return and fine you heavily when you don’t send it.

The “Zombie Business” Trap

This is the most common reason people get fined after closing a business. You stop trading, so you stop doing paperwork. You assume that because you have £0 income, you have nothing to report.

Unfortunately, the UK tax system does not work on “innocent until proven guilty.” It works on “active until proven dormant.”

Until you file the specific form that says “I have stopped,” HMRC will keep sending you letters. When you ignore those letters (because you think they don’t apply to you), the system triggers automatic fines.

How the Fines Work

If you neglect your dormant company, you actually get hit from two sides:

1. The HMRC Fine

• Why: Because you didn’t tell them you were dormant, they sent a “Notice to Deliver a Tax Return.”
• The Cost: You get an automatic £100 fine for being one day late. After 3 months, another £100 is added. If you ignore it for 6 months, they can estimate your tax bill (even though you made no money) and add 10% on top.

2. The Companies House Fine

• Why: Even if you aren’t trading, a company on the register must file accounts every year.
• The Cost: If you fail to file your Dormant Accounts (Form AA02) by the deadline, fines start at £150 and go up to £1,500. Eventually, they will strike your company off the register, which can affect your credit rating or ban you from being a director.

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What You Need To Do (Right Now)

To stop the fines and the letters, you need to tell both organisations that you are sleeping.

Step 1: Tell HMRC

• Call the Corporation Tax helpline (0300 200 3410) or write to your Corporation Tax office.
• Tell them the company is “dormant” and has ceased trading.
• Crucial: Ask them to “withdraw any outstanding tax returns.” If they agree you were dormant, they can cancel the notices to file, which often cancels the penalties attached to them.

Step 2: Tell Companies House

• You must file Form AA02 (Dormant Company Accounts).
• This is a simple form that tells the public record: “We exist, but we didn’t spend or earn any money this year.”
• You must do this every year until you officially close (“strike off”) the company.

Summary

• HMRC needs to be told you are inactive so they stop asking for tax returns.
• Companies House needs a simple form (AA02) once a year to keep the company on the register legally.
• Doing nothing is the expensive option—the fines will not go away on their own.

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