The accidentally trading trap: what counts as a significant accounting transaction

By Ben Davies · Updated 5 October 2026

Dormancy is easier to break than most directors realise. A £4 bank charge taken from the company account, or 47p of interest credited on a forgotten balance, is enough to push the company out of dormant status for the entire financial year.

This guide explains exactly what the law means by a "significant accounting transaction", how the Companies House and HMRC definitions differ, and what to do if you suspect you have already tripped the wire.

The legal definition

The rule lives in section 1169 of the Companies Act 2006. A company is dormant during any period in which it has no significant accounting transactions. A significant accounting transaction is any transaction that the company would be required to enter into its accounting records under section 386.

The law disregards the shares taken at formation and exactly four payments:

1. Payment for shares taken by a subscriber on incorporation.
2. The confirmation statement fee.
3. A change-of-name fee.
4. A re-registration fee.
5. The penalty for filing accounts late, charged under section 453.

Nothing else is disregarded. Other Companies House fees — the strike-off fee, the fee for registering a charge — are not on the list, and nor are Companies House's newer fines, such as one for a late confirmation statement. Everything else that hits the books counts. The threshold is not based on the size of the transaction. There is no de minimis. A 1p movement, recorded properly, is enough. For the full statutory wording, see what does dormant mean under the Companies Act and what "no significant accounting transactions" actually means.

Companies House vs HMRC — the definitions differ

This is the part that catches people out. There are two regulators, and they use two different tests.

Companies House uses the Companies Act 2006 definition above. It is concerned with whether you can file dormant company accounts instead of accounts that report a year's activity.

HMRC has its own test for Corporation Tax. A company is usually dormant for Corporation Tax if it has stopped trading and has no other income, such as bank interest or investments. The Companies Act test catches more: any recorded transaction ends dormancy there, while HMRC looks at trading and income. A company that receives income of any kind — dividends, rent, interest — or that buys or sells, or employs someone, isn't dormant for either.

The consequence: a company can be dormant for HMRC but non-dormant for Companies House because of a single bank charge. And a company can be dormant under the Companies Act while HMRC still has it down as active and sends a notice to deliver a Company Tax Return — that notice still has to be answered, with a nil return. If you are unsure which definition applies to you, our dormant vs non-trading company guide breaks down the distinction in plain terms, and do I need a CT600 for a dormant company covers the HMRC side specifically.

What does NOT break dormant status

These are the transactions you can safely make without losing dormancy for Companies House purposes:

• Payment for subscriber shares on incorporation. The classic £1 or £100 paid by the founding shareholder for their initial shares is explicitly excluded.
• Three Companies House fees. The confirmation statement fee (£50 online, £110 by post as of 2026), a change-of-name fee and a re-registration fee. Other Companies House fees, such as the strike-off fee or the fee for registering a charge, are not covered.
• The penalty for filing accounts late. The late-filing penalty for accounts, charged under section 453, is disregarded — although you should obviously avoid incurring it. Companies House's newer fines, such as one for a late confirmation statement, are not.
• A fee the director pays and doesn't take back. If the director personally pays the £50 confirmation statement fee from their own bank account and doesn't want the money back, it needn't go in the company's books. If the company later pays the director back, that repayment is a payment to the director, not to Companies House, so it may not be covered.

Paying the confirmation statement fee personally is the tidiest way to do it, but paying it from the company account is covered by the same exemption. What the exemption doesn't cover is anything else: never let other money flow through the company.

One more thing that doesn't break dormancy, because it was never a transaction: figures left over from trading. A company that traded in earlier years can still hold assets, owe money or be owed money while it is dormant. Holding them is not a transaction — the balance sheet simply shows them unchanged, as long as nothing about them changes in the year. What counts is anything that changes them: paying or collecting, selling, interest added, depreciation, or writing something off or down. That is why the only fixed assets that can sit unchanged are land, shares in a subsidiary that haven't lost value, or something already fully written down — equipment, vehicles and buildings have to be depreciated every year, and accountants generally treat that entry as ending dormancy. And money owed to the company counts as a carried figure only while the company still expects to be paid.

The classic traps

These are the transactions that quietly destroy dormant status. All of them are common. All of them are avoidable.

Bank interest

If the company has a bank account with any balance, and the bank credits interest — even a few pence — that is a significant accounting transaction. The interest is income, it must be recorded in the books, and it falls outside the section 1169 exemptions.

Fix: close the company bank account, or move to a current account that pays no interest. Many directors keep a nil balance for exactly this reason.

Director's loan movements

If the director puts money into the company, or takes money out, that movement is recorded against the director's loan account. It is a transaction the company is required to record. It breaks dormancy.

Fix: leave the loan account untouched. Do not "top up" the company. Do not repay yourself partway through the year.

Paying other bills alongside the confirmation statement fee

Paying the £50 confirmation statement fee from the company account is often called the classic mistake. It isn't one: section 1169 disregards the company paying the confirmation statement fee, a change-of-name or re-registration fee, or the penalty for filing accounts late.

The trap is what happens next to that card. A domain renewal, a software subscription or a bank charge on the same account is none of those, and it breaks dormancy.

Fix: if the company account is used at all, use it for the confirmation statement fee and nothing else.

Reimbursing the director

If the director pays a company cost personally and then takes the money back out of the company, the repayment to the director is a separate transaction. It is a payment to the director, not to Companies House. For any ordinary cost that breaks dormancy, and even when the cost was the confirmation statement fee, the exemption may not cover the repayment.

Fix: if you pay a cost personally, don't have the company pay you back, and don't record it as money the company owes you.

Other quiet traps

• Receiving a refund (from HMRC, a former supplier, anyone) into the company account.
• Paying a domain renewal, accountancy fee, or any service from the company card.
• Accruing or paying bank charges.
• Interest added to a loan the company owes or is owed, even if nobody pays it.
• Depreciating equipment, or writing an asset or a debt down or off — an entry with no money moving still counts.
• Receiving rental income, royalties, or dividends from investments still held in the company name.

If you are unsure whether something counts, the safer assumption is that it does. See how to check whether your company is dormant for a practical checklist, or run our free Am I dormant? checker — it surfaces the exact transactions that would break your status.

What to do if you've accidentally traded

First, do not panic. Accidentally breaking dormancy is unwelcome but not catastrophic. The company has not done anything illegal — it has simply triggered different filing obligations for that year.

The steps:

1. Identify the transaction and the date. This tells you which financial year is affected.
2. Accept that, for that year, the company is non-dormant. You cannot file dormant accounts for that year. You file FRS 105 micro-entity accounts instead (or, if the company is larger, small-company accounts). DormantFile files micro-entity accounts where the only activity is something like a Bounce Back Loan being repaid.
3. Deal with the CT600. A CT600 is due when HMRC sends a notice to deliver one. A nil CT600 will not be accurate if there was income (such as bank interest): you will need to declare the income, even if the tax owed is pennies. If HMRC has the company down as dormant and sends no notice, a company with taxable income still has to tell HMRC — speak to an accountant.
4. Reset for the following year. Close the bank account, stop the recurring transaction, and you can return to dormant status next year. Companies House does not require you to "re-declare" dormancy — you simply file dormant accounts again when the next financial year qualifies.

The keep your dormant company compliant without an accountant guide covers the year-after recovery in more detail.

How to evidence dormancy properly

Keep a simple paper trail. You do not need formal accounts software for a dormant company, but you should be able to demonstrate, if asked, that nothing happened.

• A bank statement showing nil activity (or no bank account at all).
• A note in your records of who paid the confirmation statement fee, from which personal account.
• Director's loan account showing no movement.
• A short annual dormancy memo signed by the director confirming no transactions other than exempt items.

That is enough. Dormant companies are not audited, but the directors remain personally responsible for the accuracy of the dormant accounts and any CT600 filed.

Filing once you know you are dormant

If your company is properly dormant for the year — no bank interest, no reimbursements, no stray transactions — filing is straightforward. Dormant accounts to Companies House — showing whatever the balance sheet still holds, unchanged — and a nil CT600 to HMRC whenever it sends a notice to deliver one. DormantFile files both for a flat fee per year — and if you tripped the dormancy line with something like a loan repayment, it files FRS 105 micro-entity accounts for that year instead. See how it works or pricing to take the admin off your desk. The rules are not complicated, they are just unforgiving.