Forming a limited company seems the most attractive option of a business structure due to its obvious benefits, the most striking features being the limited liability of directors, and low tax rates. But as every rose has thorns so does the company form of business structure. After a company is formed, there are numerous legal statutory compliances that a company needs to abide by. But we’ve got your back. To keep you on the top of these legal filings and submissions we’ve summarised them for you in this article:
- Annual accounts
- Corporation Tax Return (CT600)
- Confirmation statement
- VAT returns
- Employer (PAYE) returns
- Event-based filings
1. Annual Accounts
Every company needs to maintain its financial records for each financial year and prepare a summary of it at the end of the financial year. These summarized records are collectively called as annual accounts or statutory accounts. They cover:
- A profit and loss account depicting the company’s sales, running costs and the profit or loss it has made over the financial year
- A balance sheet depicting the value of everything the company owns owes and is owed on the last day of the financial year
- Notes to the accounts
- A directors’ report
- An auditors’ report (may or may not be required depending on the size of the company), (you can check the companies exempted from audit here)
The statutory accounts should conform to either International Financial Reporting Standards or New UK GAAP.
The dormant company, small company, or ‘micro-entity’ can submit simpler / abridged accounts to Companies House. These accounts need not be audited. Abridged accounts include a simpler profit and loss account and balance sheet, along with any notes and a copy of the director’s report. This enables less information about the company to be available in the public domain from Companies House.
Note that all companies, irrespective of their size need to send statutory accounts to their members and to HMRC as part of its Company Tax Return. To find out how to prepare, watch the video.
2. Corporation Tax returns
The corporation tax return is a summary of the financial transactions of a company during its corporation tax accounting year. The return depicts the taxable profit of a company after making adjustments for any allowable tax reliefs and applying for tax credits. It contains all the details relating to the corporation tax payable to HMRC. It not only comprises CT600 and supplementary pages but also accounts for the period covered by the return and computations showing how entries on the return have been calculated from the figures in the accounts.
3. Confirmation Statement
The confirmation statement is filed to confirm that the information held by the Companies House about the company is up to date. It requires information like changes in:
- Company’s name
- The registered address of the company
- Address of any Single Alternative Inspection Location (SAIL)
- Directors’ details
- Location of statutory records
- Shareholder details
- Register of People with Significant Control
- Information about share capital.
It is to be filed even if there is no change to the relevant details. Also, every company, whether dormant or non-trading, must file a confirmation statement. It is to be filed to Companies House at least once a year, but a company may choose to file it more often.
4. VAT returns
Any business whose turnover in the past 12 months exceeded the threshold of £85,000 or if it is assumed that the turnover will soon cross this threshold, needs to get registered for Value Added Tax (VAT). Every such VAT registered business need to file a VAT return.
VAT return is basically a form that depicts the amount of VAT owed to HMRC or the amount they owe to you. It shows total sales and purchases, amount of VAT owed, amount of VAT that can be reclaimed, VAT refund from HMRC for a particular VAT accounting period.
It needs to be submitted by every business registered for VAT irrespective of the fact that they don’t have any VAT to pay or reclaim. Whether a business is registered compulsorily or voluntarily, it needs to file a VAT return. Further, the VAT return needs to be filed even if the taxpayer has no VAT to pay or reclaim.
5. Employer (PAYE) returns
Every employer needs to report the employee’s payments and deductions to HMRC before each payday.
- Full Payment Submission(FPS)
Through FPS the employer reports HMRC about payments made to employees and deductions made therein. It needs to be sent to HMRC before each payday even if the payment is made to HMRC quarterly or monthly. - Employer Payment Summary
EPS is used to claim refunds/recoverable amounts from HMRC or making declarations to HMRC. EPS is used to:- Reclaim statutory maternity, paternity, adoption, or shared parental payments. These need to be reported even if the employee receives an advance payment from HMRC to cover them.
- Claim the employment allowance
- Reclaim Construction Industry Scheme (CIS) deductions
- Claim National Insurance Contributions holiday for previous tax years
- Pay Apprentice Levy
- If no employees have been paid in a tax month then-employer needs to send EPS instead of FPS.
6. Event-based filing
It is imperative for a company to ensure that the information about itself in the public domain is up to date and correct. It becomes the duty of a director to report any changes in the important details promptly to Companies House whenever a change occurs.
Here are some changes that must be reported as and when they occur:
- Change in the company name
- Change in the address of the registered office
- Establishing a Single Alternative Inspection Location (SAIL)
- Changes in location or location where the company’s statutory and other records are kept
- Updating the company’s articles of association
- Appointing or terminating a director or company secretary
- Changes in Person with Significant Control (PSC) over the company
- Changes to a director’s, secretary’s, or PSC’s details held at Companies House
- Issue of new shares
- Re-organisation of the company’s share capital
- Changing the company’s accounting reference date
Conclusion
This article aims to highlight the important filing requirements that are mandatory during the lifetime of a company. Any failure to comply by such filing requirements can make a company face serious litigations and penal actions besides the company might be dissolved or the directors may be prosecuted.
We have covered a general overview of filing requirements by a company. But different types of companies might have different filing and reporting requirements. If you’re not sure about what compliances are you required to abide by, you should contact your accountant or reach out to us at 020 3960 5080.
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