A property SPV becomes dormant at a specific lifecycle moment: completion of a sale with the next purchase not yet identified; setup of a new LtdCo in anticipation of a purchase that has not yet completed; legacy of a closed BTL portfolio retained for VAT-history continuity or brought-forward CT loss preservation; family-holding shell sitting under an IHT planning structure. The filing mechanics are simple in principle and unforgiving in practice. Most amateur dormancy claims fail on micro-transactions (bank interest on retained cash; insurance refunds after a policy cancellation; utility deposit returns; bank charges) that break the Companies Act 2006 s.1169 "no significant accounting transactions" test.
This page walks the dormant-accounts filing framework from the Companies House side and the parallel HMRC corporation-tax dormancy side, with the property-context fact patterns surfaced throughout. For the sibling operational-discipline pillars covering payroll and bookkeeping, see essential guidelines for running payroll effectively and essential bookkeeping tips for sole traders. For the incorporation-side predecessor in the SPV lifecycle, see incorporating a UK company guide.
The Companies Act 2006 s.1169 dormant-company definition
Companies Act 2006 s.1169 defines a dormant company as one that has had no "significant accounting transactions" during the relevant period (the accounting reference period).
Section 1169(2) carves out four specific transactions from the "significant" test:
- Any transaction arising from the taking of shares in the company by a subscriber to the memorandum as a result of an undertaking of his in connection with the formation of the company.
- Any transaction consisting of the payment of a fee to the registrar on a change of the company's name.
- Any transaction consisting of the payment of a fee to the registrar on the re-registration of the company.
- Any transaction consisting of the payment of a penalty for failure to deliver accounts.
- Any transaction consisting of the payment of a fee to the registrar for the registration of an annual confirmation statement (formerly annual return).
Any other transaction (a £1 bank charge, a £0.50 interest credit, a £45 insurance refund, a £92 final agent-commission rebate, a £150 settlement of a final utility bill) breaks dormancy for the period. The threshold is binary: it is not about transaction size, but about whether one happened.
For property SPVs the typical failure mode is forgetting that the retained bank balance from a post-sale completion is still earning interest. Post-2022 base-rate-cycle higher interest payments mean even modest cash balances generate £1-£5 per month of interest, each instance breaking the dormancy status.
Companies House dormancy vs HMRC dormancy
These are two parallel regimes with different tests.
| Regime | Test | Effect of dormancy |
|---|---|---|
| Companies House (CA 2006 s.1169) | No significant accounting transactions during the period | Eligible for AA02 simplified filing (if never traded); eligible for s.448 audit exemption for dormant subsidiary; small-company audit-exemption umbrella under s.477. |
| HMRC (CTA 2009 Part 3) | Not within the charge to corporation tax during the period | HMRC waives the CT600 filing requirement for the dormancy period; company can defer chargeability notification under Sch 18 FA 1998 para 2 until trading resumes. |
The operative rule is that a company can be Companies House dormant but HMRC-active, but not the reverse. A property SPV that has closed its bank account but inadvertently received a £200 letting-agent rebate during the dormant period: still Companies House dormant if the £200 was eventually returned to the agent and not held in any company asset; HMRC-active because the £200 received was within the charge to CT under CTA 2009 Part 3 trading or property income.
Each regime requires separate notification:
- Companies House: dormancy is asserted through the accounts filing route. Filing AA02 (where eligible) or full small-company accounts with the dormancy disclosure flips the company to dormant status on the Companies House register.
- HMRC: dormancy is asserted by writing to HMRC or via the HMRC dormant-companies online service. HMRC will typically waive the CT600 filing requirement for the dormancy period. If trading later resumes, the company has three months from the start of the new accounting period to notify HMRC under Sch 18 FA 1998 paragraph 2.
Filing route: AA02 vs full small-company accounts
AA02 (the simplified dormant-company accounts form) is available only if the company has never traded since incorporation. Once a company has traded at any point, even one rental month in its history, the AA02 route is permanently closed for that company.
For property SPVs this typically means:
- SPV formed in anticipation of a purchase that has not yet completed. Pure setup-phase entity; never traded. AA02 available throughout the pre-purchase dormant period.
- SPV that purchased and then sold a single property. Has traded during the holding period. AA02 permanently closed even during post-disposal dormant periods. Full small-company accounts (under FRS 105 micro-entity or FRS 102 1A small-company regime) must be filed during dormancy.
- FIC or holding LtdCo in setup phase. Pure setup-phase; never traded. AA02 available throughout.
- Legacy LtdCo retained for VAT-history continuity post-portfolio-disposal. Has traded historically. Full small-company accounts required.
AA02 comprises a single-page balance sheet showing called-up share capital, profit and loss account, and total, plus director's statements confirming dormancy and the appropriate audit-exemption claim. Free to file via the Companies House WebFiling online service. No notes, no P&L, no cash flow statement.
Full small-company accounts during dormancy comprise a balance sheet, notes (per the chosen FRS 105 or FRS 102 1A regime), and director's statements. The filing is free of charge via WebFiling (the £15 paper-filing fee applies if filed by post). The dormant-period accounts are typically substantially simpler than trading-period accounts (no profit and loss activity; minimal balance-sheet movement) but still must include the standard FRS-prescribed notes.
The filing deadlines
CA 2006 s.442 sets the filing deadline:
- Private companies: 9 months from the accounting reference date (ARD).
- Public companies: 6 months from the ARD.
- First accounts after incorporation, private companies: 21 months from the incorporation date (whichever is later than 9 months from the first ARD).
The deadline applies regardless of dormancy. A dormant AA02 due on 30 September must be filed by 30 September; the dormancy status does not extend the deadline.
The late-filing penalty stack
The Companies (Late Filing Penalties) Regulations 2008 (SI 2008/497) sets the late-filing penalty tiers:
| Lateness | Private company | Public company |
|---|---|---|
| Up to 1 month | £150 | £750 |
| More than 1 month, up to 3 months | £375 | £1,500 |
| More than 3 months, up to 6 months | £750 | £3,000 |
| More than 6 months | £1,500 | £7,500 |
Doubled if late two years running. A property SPV that files late in year one and late again in year two pays double the year-two tier.
The penalty regime applies regardless of dormancy. A dormant AA02 filed one day late costs £150 just like a full set of trading accounts. Late filing also exposes the directors to potential strike-off action under CA 2006 s.1000.
The confirmation statement obligation survives dormancy
CA 2006 s.853A requires every company to file a confirmation statement (CS01) within 14 days of the confirmation date (12 months from incorporation, then annually). The obligation continues regardless of dormancy.
The Companies House fee schedule was revised on 1 May 2024:
- CS01 online (via WebFiling): £34 (revised up from £13).
- CS01 paper: £62 (revised up from £40).
The CS01 confirms the company's registered details (registered office, directors, shareholders, PSC information, registered email address from ECCTA 2023, lawful-purpose statement from ECCTA 2023). For a dormant SPV with no operational activity, the CS01 is typically a "no changes" confirmation; the filing takes around 5 minutes via WebFiling.
Critical for ECCTA 2023 compliance: the CS01 also confirms the identity-verification status of directors and PSCs. The ID verification rollout from 2025 onwards applies to dormant LtdCo directors and PSCs no less than active ones. For the operational mechanics of ECCTA 2023 ID verification, see the existing ECCTA 2023 ID verification mandatory Companies House landlord LtdCos page.
The HMRC corporation-tax notification
The HMRC side is asserted by writing to HMRC or via the HMRC online service for dormant companies. HMRC will typically:
- Confirm receipt and update its records to remove the company from the active CT600 filer list.
- Waive the requirement to file a CT600 for the dormancy period.
- Send periodic check-in correspondence to confirm continued dormancy.
If trading resumes after a period of dormancy, the company has three months from the start of the new accounting period to notify HMRC under Schedule 18 FA 1998 paragraph 2 (chargeability notification). Missing the chargeability notification window triggers a fixed £100 penalty plus escalating tiers, separate from the late-CT600 penalties that engage after the statutory filing deadline.
Property-specific dormancy-failure patterns
Four patterns dominate the amateur dormancy-failure caseload in the property orbit:
Pattern 1: Bank interest on retained cash
A property SPV completes a sale with £180,000 of retained cash held in the company bank account. The director plans to sit dormant for 18 months while scouting the next purchase. The retained cash earns £180 of interest in the first month at a 1.2% AER instant-access rate. The £180 is a significant accounting transaction; dormancy is broken for the period.
The mitigant: close the company bank account before claiming dormancy. Move the retained cash to the director's loan account (a credit balance owed by the company to the director) and have the director withdraw the cash to a personal account. Alternatively, move the retained cash to a fee-free, no-interest current account (rare but available). The cleanest route is to close the account entirely.
Pattern 2: Insurance premium refunds
A property SPV cancels its landlord buildings and contents insurance after completing the sale. The insurer issues a pro-rata refund of £247 for the unexpired period. The refund arrives 6 weeks after the sale completes. The £247 is a significant accounting transaction; the dormant-from date cannot be the disposal-completion date.
The mitigant: cancel the insurance and confirm in writing with the insurer that no refunds will be processed (write off the unexpired-period value as commercial cost-of-closure). Alternatively, set the dormant-from date as the date the final refund clears, not the disposal date.
Pattern 3: Utility deposit returns
A property SPV settles final energy, water and council-tax bills at the point of disposal. Where the utility provider held a security deposit (common for serviced-accommodation and HMO operations), the deposit is refunded weeks or months after the final bill clearance. A £150 returned utility deposit is a significant accounting transaction.
The mitigant: settle and refund all utility deposits before claiming dormancy. For a serviced-accommodation operator with multiple deposit relationships, this typically requires 4-8 weeks of post-disposal admin work; build the timeline into the dormancy-transition plan.
Pattern 4: Bank charges and direct debits
A property SPV bank account incurs a £5.50 monthly account-fee bank charge. The account also has live direct debits (insurance, software subscriptions, professional memberships) that continue to debit until cancelled. Each monthly charge is a significant accounting transaction.
The mitigant: cancel all live direct debits and either close the bank account or move to a fee-free account. The transition takes a calendar month minimum; build it into the dormancy-transition plan.
The dormant subsidiary audit exemption
Under CA 2006 s.448 + s.448A + s.448B, a dormant subsidiary can claim audit exemption if:
- The parent company is established under UK law and includes the subsidiary in its consolidated accounts (s.448A).
- All members of the subsidiary agree to the exemption (s.448B).
- The parent gives a statutory guarantee on Form AA06 covering all the subsidiary's outstanding liabilities at the end of the financial year (s.448B).
The AA06 parent guarantee is a real commitment, not a formality. It covers ALL the subsidiary's outstanding liabilities, not just specific ones, and continues until the subsidiary is wound up or the parent revokes the guarantee on a prospective basis. Many parents reject the route once they understand the guarantee's scope.
Most property SPV dormancy claims use the small-company audit-exemption umbrella under CA 2006 s.477 instead (turnover up to £15m, balance-sheet total up to £7.5m, employees up to 50, satisfying any two of three from 6 April 2025 per SI 2024/688). The small-company route does not require a parent guarantee and is operationally cleaner for most property SPV structures.
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Worked example: the post-disposal SPV dormancy transition
Persona: Holloway-family-SPV-1. Sole-director LtdCo BTL that has held a single rental flat in Cambridge since 2019. The property was sold in November 2025 with completion proceeds £180,000 (after CGT). Director intends to hold the SPV dormant for 18 months while scouting the next purchase, then re-acquire and resume trading.
Lifecycle transition steps:
- December 2025: final post-sale receipts identified. Insurance refund £45 from cancelled landlord policy; final agent commission rebate £92. Both are significant accounting transactions that prevent dormancy starting in November 2025.
- January 2026: all post-sale transactions closed. Final bank account closing balance £180,137. Director transfers retained cash to personal account as either a loan repayment (director's loan account credit) or a dividend (FA 2026 dividend rates apply at distribution; the choice depends on the director's marginal rate and the DLA balance).
- February 2026: SPV bank account closed. Insurance policies cancelled. Any remaining direct debits ceased. Utility deposit refunds received (£0 in this case; the SPV did not hold deposits).
- April 2026: new accounting period commences with the company in dormant state from start. Director writes to HMRC notifying dormancy.
- September 2026: Companies House confirmation statement due. CS01 filed online at £34. ID verification under ECCTA 2023 must be in place for the director and PSC.
- December 2026: accounts for the year ending September 2025 due (9 months from ARD). Because the SPV traded for part of the period (April-November 2025) before going dormant, the AA02 simplified form is NOT available; full small-company accounts must be filed.
- April 2027: next accounting period starts (year ending September 2026 was the first dormant-throughout period). For this period the AA02 simplified form IS available because the company never traded during the period.
- June 2027: AA02 filed for the September 2026 dormant year-end period.
The 18-month dormancy window completes around June 2027. The director then identifies the next purchase, notifies HMRC of resumption of trading within three months under Sch 18 FA 1998 para 2, re-opens the bank account, and resumes the normal active filing cycle.
Keeping the SPV dormant vs striking off
The decision between dormancy and voluntary strike-off depends on five factors:
- Future-purchase intent. If the director plans to re-use the SPV for a future purchase within 24 months, dormancy is the right choice; the formation legal-fee saving on re-incorporation plus the cleaner Companies House history justifies the dormancy admin overhead.
- Brought-forward CT loss preservation. Where the SPV has unused trading losses from prior years (perhaps a refurb period that generated capital allowances exceeding rental income), keeping the SPV dormant preserves the losses subject to the CTA 2010 Part 14 change-of-ownership tests. A strike-off cancels the losses.
- Historic VAT registration. If the SPV was VAT-registered (commonly because it opted to tax commercial property), keeping the SPV dormant preserves the VAT registration. Re-registering after strike-off requires going through the registration process again, with potential for HMRC delays.
- Running costs of dormancy. Around £34-50 per year for the confirmation statement fee, plus accountant time for the AA02 or small-company accounts (£100-£300 per year typical), plus any residual bank account fees. Total around £150-£400 per year.
- Cost of strike-off then re-incorporation. Strike-off via DS01 under CA 2006 s.1003 costs £33 online or £44 paper. Re-incorporation around £12. Total around £45-£60 one-off.
For a director uncertain about a future purchase within 24 months, strike-off is usually cleaner: total cost of strike-off plus future re-incorporation (~£60) is below 1-2 years of dormancy costs (~£150-£800). For an actively-portfolio-rebalancing landlord with a confident 6-12 month next-purchase horizon, dormancy is the right choice because the SPV is reusable immediately.
The small-company threshold uplift from 6 April 2025
Per SI 2024/688 amendments to CA 2006 s.382, the small-company qualifying conditions uplifted from 6 April 2025:
- Turnover threshold raised from £10.2m to £15m.
- Balance-sheet total raised from £5.1m to £7.5m.
- Employee threshold unchanged at 50.
The two-of-three test continues: the company must satisfy two of the three to qualify. For dormant LtdCos this matters because the small-company audit-exemption umbrella under CA 2006 s.477 covers more companies under the new thresholds, and the AA06 parent-guarantee route under s.448B becomes available to a wider range of parent companies. The uplift is particularly relevant for FIC structures where the parent FIC may have grown above the pre-uplift thresholds while subsidiary SPVs sit dormant.
Waking the SPV back up
When the director identifies the next purchase and the SPV needs to resume trading:
- Notify HMRC within three months of the start of the new accounting period that the company is again chargeable to CT under Sch 18 FA 1998 para 2. The notification can be made by writing or via the HMRC online service.
- Re-open the bank account or set up a new one. Most banks require the director to apply afresh rather than reactivate a closed account; expect 2-4 weeks for the new account to be operational.
- File the next set of full small-company accounts (not AA02, because trading resumed during the period).
- Verify brought-forward CT losses against the CTA 2010 Part 14 ss.673-676 change-of-ownership tests. If the same shareholders control, losses typically survive. A major change in the nature of activity restricts them. Property SPVs that move from residential BTL to commercial property as the next acquisition risk the major-change restriction.
The companion lifecycle pages
- Incorporating a UK company guide. The predecessor lifecycle step: setting up the SPV before its first purchase.
- Essential guidelines for running payroll effectively. The sibling operational-discipline pillar covering payroll. Dormant SPVs have no payroll; closing payroll is part of the dormancy transition for any SPV that previously paid the director.
- Essential bookkeeping tips for sole traders. The sole-trader-side operational-discipline pillar; the director of a dormant SPV may still have personal-side sole-trader bookkeeping obligations.
- Corporate tax planning strategies. The strategic-CT context for brought-forward loss preservation in a dormant SPV.
- ECCTA 2023 ID verification mandatory Companies House landlord LtdCos. The director and PSC identity-verification regime that applies to dormant LtdCos no less than active ones.
- Companies House confirmation statement changes 2024 onwards PSC disclosure. The CS01 reform that applies during dormancy as during active periods.
The bigger picture
Dormant property SPVs are a common state, not an exotic one. The filing mechanics are simple but unforgiving. The amateur failure modes (bank interest, insurance refunds, utility deposits, bank charges) are predictable and avoidable. The dormancy-vs-strike-off decision is fact-sensitive and depends on the director's next-purchase horizon plus the value of preserved historic CT losses and VAT registration.
The operational discipline is in three places: (a) document the dormant-from date precisely as the actual zero-activity start, not the disposal date; (b) maintain the confirmation statement and HMRC dormancy notification cadence even during dormancy; (c) verify the small-company threshold position annually because the SI 2024/688 uplift expanded the umbrella materially from 6 April 2025.