When you set up a limited company – whether you were aware of it or not – as a director you took on a wide range of legal responsibilities, many linked to tax, accounting and financial record keeping. So, what are some of those key responsibilities and what do you do to ensure compliance?
1 Confirmation Statement
Every company, whether trading or not, must file a Confirmation Statement. It’s a snapshot of information about the company at a point in time, for example, details of its shareholders and directors. This is often confused with the company accounts, but it’s very different.
Filing the Confirmation Statement ensures that the data held by Companies House about your company is current. It must be filed at least once a year at Companies House, with a fee of £13 payable if filed online. The Confirmation Statement is easy to file, you can visit government website gov.uk to find out how to do it. You can also watch a short video about Confirmation Statements.
2 Year-end or accounting reference period
Your accounting date is also known as your year-end date or accounting reference date. It’s the date up to which your accounts are prepared and is generally the end of a calendar month, for example, 31 December or 31 March.
Companies House will have allocated your limited company’s year-end when it was registered (“incorporated”). The year-end will be the end of the month in which the company was set up. So, for example, if the company was set up on 5 March 2019, the year-end will be 31 March and the first accounts will be prepared up to 31 March 2020.
HMRC won’t know this date, because Companies House and HMRC don’t work in tandem. So, you also must tell HMRC your company year-end date. Should you wish, it can be changed via the Companies House online service or you can download the AA01 form, complete it and post it to Companies House, but doing it online is quicker.
3 Tax year
Your company is likely to have a different year-end to the tax year-end, which is 5 April. That’s fine, but there are deadlines for both the company year-end and the tax year-end.
4 Filing and payment deadlines
- You must file your company accounts at Companies House within nine months from the end of the accounting reference period.
- Corporation Tax must be paid within nine months and one day from the end of the accounting reference period.
- Your Corporation Tax return must be filed within 12 months from the end of the accounting reference period.
5 Annual accounts
Although Companies House only requires an extract of the accounts – which may look easy to prepare – HMRC needs a full set of accounts, including a detailed profit and loss account and directors’ report. In any case, you’ll need to compile a full set of accounts before you can produce an extract for Companies House.
Companies House and HMRC are very different government organisations and they don’t work together. So, do not assume that just because you’ve filed something with one that the other will automatically get it, too.
And accounts must be in a specified format; they’re usually produced from software that ensures this. You can’t just pop a set of accounts together in Word.
6 CT 600 Corporation Tax return
As well as a full set of accounts, HMRC will require a completed CT600 company tax return form. This is not a straightforward form. So, unless you have experience, it’s best left to accounting professionals to complete.
7 Paying Corporation Tax
Your Corporation Tax must be paid within nine months and one day of the end of your accounting period (as previously stated). Don’t forget to enter the amount due into your accounting software, recording it as a creditor in the annual accounts.
8 Self-Assessment tax return
Company directors with income that hasn’t been taxed elsewhere should complete a Self-Assessment tax return, detailing all of their income from every source – not just from the company.
9 PAYE Real Time Information returns
Businesses that employ staff whose wages exceed the Lower Earnings Limit have numerous reporting requirements, but in particular, they must file monthly Real Time Information (RTI) returns. Otherwise, they risk HMRC imposing a fine of £100 for each month missed.
10 Late filing
Late filing of any of the above returns can result in a fine, penalties and interest. In the case of your accounts, both Companies House and HMRC can fine your company. The fines start at £100 from HMRC and £150 from Companies House and increase from there up to a possible criminal conviction for significant late filing.
11 Dormant accounts and closing the company
If you stop trading, you must file dormant accounts each year. If you decide to close the company down, there is even a long-winded process to follow for that. Advice from an experienced accountant can, of course, make both requirements quicker, cheaper and less stressful, giving you peace of mind that all necessary things have been done in the right way.