A dormant company is one that has had no ´significant accounting transactions´ during the accounting period. A ‘significant accounting transaction’ is one which the company should enter in its accounting records.
Costs such as the amount paid for shares on incorporation
and a few costs that the company may incur in order to keep the
company registered at Companies House, do not count as
The term ´non-trading company´ has no legal
meaning. A non-trading company has no significant accounting
transactions, which simply means no entries in the
company´s accounting records.
A company can be non-trading in the sense that it isn´t doing business. But it may still have other accounting transactions going through its books, which means that it is not dormant in a legal sense. A dormant company must not have any accounting transactions except specific allowable transactions that can be disregarded.
It can therefore be said that ALL dormant companies are non
traders but NOT all non traders are dormant.
The most common reason for coming across non-trading or dormant companies, is that they are simply incorporated to protect a trading style or product name. The shares of these companies are invariably held by a holding company, this is normally the company you should be interested in. Always look at the shareholders of such companies.
While the company is dormant, it must still prepare and submit various other documents including annual company balance sheets to Companies House.
A non-trading company must deliver Dormant Accounts and an Annual Return annually.
Dormant accounts include very little information except for
assets and shares held.
A dormant company will not be assigned a credit score or limit due to the lack of financial data. See Dormant Companies for more information.