A company can be classified as dormant if it hasn’t engaged in any significant accounting transactions during the financial year. However, if it has carried out activities such as settling invoices, paying bank charges or interest, compensating employees, or distributing dividends to shareholders, it will lose its dormant status.

There are exceptions to this rule. Activities such as payment for shares issued during incorporation, late filing penalties, and filing fees paid to Companies House are excluded from counting as significant accounting transactions.