Do dormant companies count as associated companies?

When a dormant company, or one that doesn't trade, is left out of the associated companies count, why Companies House dormant accounts aren't the whole answer, and how holding companies are treated.

Updated 1 November 2026. General guidance, not tax advice.

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A company that is controlled with yours is left out of the associated companies count if it didn't carry on a trade or business at any time in your accounting period. That's a tax test, not the Companies House one, so a company that files dormant accounts usually drops out, but not always.

The rule

An associated company is disregarded if it has not carried on a trade or business at any time in the accounting period.

Two points follow:

Any activity in the period brings it back in. A company that traded for one month of a twelve month period counts for the whole period.
Part of a period can be disregarded. If a company was only associated for part of the period, and carried on no trade or business during that part, it's disregarded for that part.

Check each accounting period separately. A company can be dormant one year and trading the next.

"Dormant" at Companies House isn't the same test

At Companies House, a company is dormant if it has no significant accounting transactions, and it can file dormant accounts. For associated companies, the question is whether it carried on a trade or business, which is wider than trading.

A company can carry on a business without trading, for example by:

letting property
holding and managing investments

Such a company counts, even if its profits are small. Dormant accounts are good evidence that a company did nothing, but look at what it actually did in the period.

Holding companies

A holding company usually counts. The law has a narrow exception only for a passive holding company. It is left out only if, throughout the accounting period, it:

carries on no trade
has at least one 51% subsidiary
has no assets other than shares in its 51% subsidiaries
has no income other than dividends, which it passes on to its own shareholders
has no chargeable gains, management expenses or deductible charitable donations

A holding company that charges management fees, or owns property, other investments or any asset besides shares in its 51% subsidiaries, doesn't qualify. Read strictly, the law allows it no other assets at all, so a cash balance can be enough to bring it back in.

Evidence to keep

For each company you leave out, note:

the accounts that show it was dormant for the period, or why it carried on no trade or business
for a passive holding company, how it meets each condition
any dates when activity started or stopped

If HMRC asks why a company wasn't counted, that note is your answer. Our guide to HMRC's associated companies letters covers replying.

Checking the companies

When you check a company, any linked company whose accounts for the period are dormant, or whose only sign is the dormant SIC code 99999, is labelled Probably not, with the accounts linked. If the period's accounts aren't filed yet, the label says which year's accounts were used. A company with the dormant SIC code 99999 but trading accounts, or a possible passive holding company, is labelled Please check, because the register can't settle it.