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Dormant companies don’t trade, while active ones run daily operations. Both must file a Confirmation Statement, but tax duties differ.
When running a business in the UK, it’s important to understand the difference between a dormant company and an active company. Both statuses are recognised by Companies House, but they come with very different responsibilities and reporting requirements. Knowing the distinction can help business owners manage their compliance obligations effectively.
A dormant company is a registered business that is not currently trading or carrying out business activity. This means it has no significant accounting transactions, such as buying or selling goods and services, paying salaries, or receiving income. Many entrepreneurs choose to keep a company dormant if they want to secure a business name for future use or temporarily pause trading without dissolving the company.
No significant financial transactions take place.
Still must file a Confirmation Statement with Companies House.
Required to submit dormant company accounts annually.
Often used to hold assets, intellectual property, or prepare for future trading.
An active company, on the other hand, is one that is trading and carrying out regular business activities. This includes generating income, paying expenses, employing staff, or making investments. Active companies have greater compliance obligations compared to dormant ones.
Must file a Confirmation Statement and full annual accounts.
Required to pay Corporation Tax on profits.
Must register with HMRC for tax purposes.
Engaged in day-to-day commercial operations.
Need help filing your Confirmation Statement or updating company details? Visit File Confirmation Statement for expert guidance, templates, and reliable support from professionals.
| Aspect | Dormant Company | Active Company |
|---|---|---|
| Business Activity | No trading or significant transactions | Actively trading, generating income |
| Accounts | Dormant accounts filed with Companies House | Full statutory accounts required |
| Confirmation Statement | Must be filed | Must be filed |
| Corporation Tax | Not required (if truly dormant) | Must register and pay on profits |
| Use Case | Holding assets, saving a company name | Day-to-day trading operations |
Understanding whether your company is dormant or active is essential to meeting your legal responsibilities. Failing to file the correct accounts or statements can result in penalties, regardless of your company’s trading status. By correctly classifying your company, you can avoid unnecessary fines and stay compliant with Companies House and HMRC.
The key difference between dormant and active companies lies in whether the business is trading or not. Both statuses require ongoing reporting, but the level of responsibility varies. Business owners should review their company’s activity each year and ensure they file the correct documents to remain compliant.
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