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

By DormantFile · Updated 27 May 2026

Dormancy is easier to break than most directors realise. A £13 confirmation statement fee paid from the company bank 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.

Two transactions are explicitly carved out of that definition:

Payment for shares taken by a subscriber on incorporation.
Fees paid to the Registrar of Companies — confirmation statement fees, change-of-name fees, and Companies House late filing penalties.

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 slightly different yardsticks.

Companies House uses the Companies Act 2006 definition above. It is concerned with whether you can file dormant company accounts (form AA02) instead of full accounts.

HMRC uses a narrower, more practical concept: trading. HMRC considers a company dormant for Corporation Tax purposes if it is not carrying on a business activity, not trading, and not receiving any income. HMRC's view of what counts as trading is broader than the Companies Act's view of what counts as a significant accounting transaction — but the two largely overlap in practice.

The consequence: a company can be dormant for HMRC (no trade, no income, no CT600 required) but non-dormant for Companies House because of a single bank transaction. Or the other way round in edge cases. 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.
Companies House filing fees. The confirmation statement fee (£34 online, £62 by post as of 2026), change-of-name fees, and re-registration fees are all excluded.
Companies House late filing penalties. Even penalties imposed by the Registrar are excluded — although you should obviously avoid incurring them.
Fees paid by a third party on the company's behalf. If the director personally pays the £34 confirmation statement fee from their own bank account, nothing touches the company's books and dormancy is preserved. This is the cleanest way to stay dormant.

That last point is the safest practice. Pay everything personally. Never let money flow through the company.

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 the Companies House fee from the company account

This is the single most common mistake. The director pays the £34 confirmation statement fee using the company debit card or company bank transfer, believing it is fine because the fee itself is exempt.

The exemption applies to the fee. It does not stop the bank transaction from being a recordable accounting event. The moment £34 leaves the company account, the company has had a significant accounting transaction.

Fix: pay the fee personally from your own account. Do not reimburse yourself from the company.

Reimbursing the director

Following on from the above: if the director pays a CH fee personally and then takes £34 out of the company to cover it, the reimbursement is the recordable transaction. Same outcome — dormancy broken.

Fix: absorb the cost personally. £34 a year is the price of staying cleanly dormant.

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.
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:

Identify the transaction and the date. This tells you which financial year is affected.
Accept that, for that year, the company is non-dormant. You cannot file dormant accounts (AA02) for that year. You must file micro-entity or small-company accounts instead.
File a CT600 if registered for Corporation Tax. 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.
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 AA02 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. AA02 to Companies House, and a nil CT600 to HMRC if you are registered for Corporation Tax. DormantFile handles both filings for a flat fee per year. See how it works or pricing if you want to take the admin off your desk. If you would rather DIY, the guides above will walk you through it — the rules are not complicated, they are just unforgiving.