In April of this year, 12,000 businesses were fined by Companies House for filing their accounts late. If these firms fail to file the accounts after being warned, they risk being shut down. This, for example, happened to TweetDeck in May after they (and their parent company Twitter) repeatedly ignored the Companies House warnings.
In the first two parts of the series, we discussed the research and work tied with forming a UK company. All of that effort could easily go to waste if you don’t keep your paperwork up to date.
How to form a limited company in the UK
There are different points in the year when you will be expected to file various information with HM Revenue & Customs and Companies House. Knowing exactly what you need to file and having it marked in your calendar will mean you don’t get any nasty surprises.
Your company’s financial year
Once your limited company has been registered at Companies House, you should receive a Certificate of Incorporation, which shows your company number and the date that it was incorporated (formed). Be sure to make a note of this date – you’ll need it to calculate when you have to file most of the documents discussed below.
Your limited company’s financial year ends on the last day of the month of your company’s first anniversary. Let’s break that down.
Example: If your company was incorporated on June 12th, 2015, your first financial year would run from June 12th, 2015 until June 30th, 2016. In other words, your first financial year would end on June 30th, rather than June 12th, 2016. The next financial year would run therefore from July 1st, 2016 until June 30th, 2017.
Not long after registering with Companies House, HMRC will send a dedicated letter to your registered office address. It’s called the CT41G and will include the following:
- Your Unique Tax Reference (UTR) number;
- The information you need to give to HMRC about your company;
- The information on how to set up your company’s HMRC online account for Company Tax Returns and Corporation Tax.
Your UTR will be used as reference each time you contact HMRC. All of your company’s tax information will be stored against this number. It should be kept securely, and only you and your accountant/agent should have access to it.
It is your duty to respond to HMRC within three months of starting a business, with the information they have requested on the CT41G form.
Your company’s annual return
Each year, you need to update Companies House on your business by sending a company annual return. This document includes general information about your company’s directors, secretaries, registered office address, shareholders and share capital. Companies House use this info to check if your business’s still running and to keep their records up to date.
The first annual return must be submitted within 28 days of the company’s first anniversary of incorporation. After that, an annual return needs to be submitted to Companies House every 12 months.
Example: If your company was incorporated on June 12th, 2015, your first annual return would be due by July 10th 2016.
Your company’s annual accounts
As well as sending them your annual return, you also need to file your company’s annual accounts with Companies House. These will become part of public record. They will be made available for anyone to look at, including your competitors as well as potential clients, who may use them to find out more about your services.
The amount of detail you’ll need to go into depends on the size and nature of your business. Most accounts will include:
- A ‘balance sheet’, which shows the value of everything the company owns and is owed on the last day of the financial year;
- A ‘profit and loss account’, which shows the company’s sales, running costs and the profit or loss it has made over the financial year;
- Notes about the accounts;
- A director’s report;
- An auditor’s report (where appropriate).
Your first annual return needs to be submitted to Companies House 21 months after the date of incorporation. After that, your annual accounts are due nine months after your financial year end.
Example: If your company was incorporated on June 12th, 2015, your first annual accounts would be due by March 12th, 2017. After that, your annual accounts would be due by March 30th every year.
Your company’s corporation tax
Google, Amazon, Apple and lots of other high-profile companies have been in the news recently for the amount of Corporation Tax they’ve paid. In most cases, the information used by journalists has been taken from annual accounts filed at Companies House. As well as being declared to Companies House, the amount of tax your company will pay also needs to be declared to HMRC.
Your company’s Tax Return is submitted annually. You have a duty to file a return even if your company didn’t make a profit during the year. The tax return includes:
- A completed CT600 form;
- Corporation Tax calculations (and supporting documents if you’ve been asked to submit them);
- Your company’s statutory accounts.
You have to pay your Corporation Tax 9 months and one day after your company’s financial year ends. Your first Tax Return is not due until three months later. But it makes sense to do them at the same time, so you know what tax to pay.
Example: If your company was incorporated on June 12th, 2015, your first financial year-end would be June 30th, 2015, and your first Tax Return would be due by June 30th, 2016. Your first Corporation Tax payment would be due by April 1st, 2016.
After that, your Tax Return would be due by June 30th every year, and your Corporation Tax would be due by April 1st every year.
Self Assessment tax
As well as paying your company taxes, you also have to pay your personal taxes. All company directors need to file a Self Assessment tax return each year. Although this is worked out on the standard financial year (April 6th – April 5th), the tax returns are due later. The due date for paper forms is the following October and the following January for online forms and payments.
Example: The 2014/2015 tax year ended on April 5h, 2015. Paper Self Assessment tax returns are due by October 31st, 2015. Online Self Assessment tax returns and all payments are due by January 31st, 2016.
Getting it right
This is by no means a comprehensive list of the paperwork your company will need to complete. If you are PAYE or VAT registered, there will be additional requirements. However, having the various annual accounts, returns and forms marked on your calendar will help you allocate time for their preparation, and stop you from getting in trouble with the taxman or Companies House. Then, all you need to worry about is your company becoming big enough that journalists start trawling through and checking how much tax you’ve been paying (or not).