consequence of a 'Dormant' company paying fees, reporting as dormant to CH and HMRC?

[i.dan]

Our property management company is dormant and makes annual reports to Companies house and HMRC to confirm it is dormant. Any financial activity is dealt with by the Directors through their own bank accounts. This includes recently paying for legal fees in regard to a dispute between company members. The party named in the legal costs is The Company Ltd, not the Directors. The issue resulted in costs for the Company and to the Company from the member. But.. The Company is inactive, it has no bank account and does not trade. It makes those dormant returns annually and has continued to do so.
Are we committing fraud in some way. Are our accounts in effect knowingly false. And if so at what cost and consequence to the Company or its Directors? Are we better off trying to drop the legal issue (a £25K debt to The Company from one of its members) entirely rather than having to deal with the situation me otherwise be in with CH and HMRC etc?

[atticus]

The saving on professional fees (accountants in this case) may be a false economy.