When you decided to set up your limited company, whether you were aware or not, as a director of that limited company you agreed to become responsible for a plethora of administration.
Here’s a quick explanation of some of the things that you will need to do!
An Annual Return
This is a snap shot of information about the Company at a point in time e.g. who are the shareholders, directors etc. This if often confused with the accounts but is very different.
This must be filed at Companies House along with a fee of £14 if electronic or £30 if paper.
Year End or Accounting Reference Period
Your accounting date is also known as the accounting reference date or year end date
It is 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.
The year end of the limited company will have been allocated on set up of the company by Companies House.
The year end will be the end of the month in which the company was set up.
For example if the company was set up on 5 March 2009 then the year end will be 31 March and the first accounts will be due at 31 March 2010.
HMRC will not know this date as Companies House and HMRC do not work together!
So you also have to inform HMRC of the year end date.
This is done on a form called a CT41 G which will be automatically sent from HMRC to the registered office address of the limited company shortly after it has been set up.
The year end date can be changed but this has to be communicated to Companies House on a special form and also to HMRC.
You will find that it is likely that the company has a different year end to the tax year end which is 5 April. This is fine but there are deadlines for both the company year end and the tax year end.
As regards filing your accounts then the following are important:
- File the accounts at Companies House within 9 months from the end of the accounting reference period
- Corporation tax has to be paid within 9 months and one day from the end of the accounting reference period
- The corporation tax return has to be filed within 12 months from the end of the accounting reference period
Although Companies House only require an abbreviated set of accounts to be filed, which look easy to prepare, HMRC do require a full set of accounts including a detailed profit and loss account and directors report.
Companies House and HMRC are very different government departments and do not work together. So do not assume that just because you have filed some with one of them, the other gets it as well.
From 1 April 2011 the accounts filed at HMRC need to be in iXBRL format.
iXBRL stands for inline extensible Business Reporting Language – fancy speak for a special kind of text file which enables data to be read both by humans and computers.
What it means for those currently filing CT600 returns is essentially as follows:
- Your CT600 return(s) can no longer be filed on paper but will have to be submitted online
- If you have been filing online and are used to attaching final accounts in Word or Excel as a PDF document you will need to be able to convert those same final accounts into iXBRL or (better still) create them as an iXBRL document using a suitable final accounts product
- If you have been used to filing online using the HMRC Gateway you may well need to consider switching to third party software, as we understand from HMRC that from April the Gateway service will only be suitable for extremely straightforward and simple returns.
There are a number of tagging and conversion solutions currently being offered but be careful.
HMRC advise that you will remain responsible for the accuracy of any return you submit.
So if (for example) you pay to get your final accounts converted from Word to iXBRL, you will need to be confident that this is going to be done with total accuracy.
CT 600 Corporation Tax Return
Along with the full set of accounts, HMRC will require a CT 600 to be completed.
This is not a straight forward form and, unless you have experience, it is best left to professionals to complete.
Paying Corporation Tax
Your corporation tax needs to be paid within 9 months of the end of your accounting period.
Don’t forget to enter the amount paid in to your accounting system.
Annual Self Assessment
Regardless of how much they earn, each director of the Company may have to complete a self assessment which should show all of their income from every source, not just from the company.
Annual Employer Returns
Any business which employs staff has a number of reporting requirements eg. P35, P14, P11D etc.
Employing a member of staff includes yourself as a director if you pay over the Lower Earnings Limit.
Late filing of any of the above returns will result in a fine, penalties and interest. In the case of your accounts you can be fined by both Companies House and HMRC. The fines start at £100 and increase from there up to the possibility of a criminal conviction for significant late filing of documents.
It doesn’t end there of course. Even when you have stopped trading you have to file dormant accounts each year or if you decide to close the company down there is even a long winded process to follow for that.