We’re talking about Limited Companies here, not sole traders. Failure to know these requirements like the back of your hand could lead to surcharges which might cripple you. A lack of attention to these vital basic taxes and forms could result in:
- Interest payments
- Dissolution of the Company
Small businesses tend to operate on small margins. And the HMRC cares only about your compliance to the law, not your trials in succeeding.
Company Accounts and Confirmation Statement
Once a year, the Company will need to file what’s called “Company Statutory Accounts” with Companies House. The company must also file the Company Statutory Accounts directly with HMRC.
These Company Accounts are filed 9 months after the fiscal year-end.
HMRC receives the “full” accounts. And Companies House receives “abbreviated” accounts which do not contain detailed reports such as your profit and loss account. This helps protect your performance of the business.
The company also needs to file a “Confirmation Statement,” which is basically a “snapshot” of your business. It contains information such as the shareholdings, the address, who the directors are, etc. This only needs to be filed with Companies House.
Corporation Tax Return — basic terminology
Okay, the next bit might seem complex, but bear with me. It’s very easy.
All Limited Companies must pay (and file a return for) “Corporation Tax.” In its simplest sense, this is a tax paid on the company’s profits. To make things slightly confusing, the form used to file this tax is called a CT600 Form. (Don’t ask me what the 600 stands for, but the CT probably stands for Corporation Tax.)
This CT600 form is filed with HMRC.
Right, simple enough. But before the CT600 form can be fully filled out, you need to do a “Tax Calculation.”
A Tax Calculation is a mathematical calculation, taking into account reliefs and allowances, which gives you one tax figure which you then bang into your statutory accounts and also the CT600 form and file with HMRC.
The CT600 must be filed 12 months after your company’s financial year-end. But the payment for the return needs to be made sooner than that. It must be made 9 months and 1 day after your company’s financial year-end. Don’t ask me why it’s 9 months and a day…
So, for example, if your company ends its year on 31 March, then 9 months after that equals 31 December. Add a day to that, and the Corporation Tax is due on 1 January. (If you have an accountant, he will work out all these dates for you, as well as working out your reliefs and allowances to come up with the final taxable figure in your Tax Calculation.)
UK company filing duties for payroll / PAYE
Since the introduction of “Real-Time Information” (or “RTI”) in 2013, companies need to report their PAYE to HMRC monthly.
“PAYE” means “Pay As You Earn.” It refers to the practice of paying tax to the HMRC as you earn (for employees), as opposed to once a year (for companies).
“Real-Time Information” is a technical term meaning “happening without delay.”
When running payroll, the Company takes each staff member’s salary before tax and then deducts:
- Income tax
- The employee’s National Insurance
- Any other deductions applicable such as pension contributions
All deducted amounts must be paid immediately to HMRC (or other relevant parties, where applicable). The HMRC lists all deductions on its website.
In addition, you then file a report of these figures to HMRC once a month, every time you “run a payroll” and pay employees.
Larger employers might fall into a “Pension Automatic Enrolment” scheme, and they will need to run this and submit an applicable filing for it regularly. But companies that large will have accountants, so you don’t need to worry about this (yet) if you’re small.
Filing duties for companies registered for VAT
If you’ve voluntarily registered for VAT, or if you’ve hit the VAT threshold and then had to register, you must submit a VAT return every quarter.
There are two duties involved in this:
- Filing the return
- Paying the VAT itself
The return must be filed 1 month and 7 days after the end of the quarter. So, if your quarter ends on 31 March, you would need to both file a return and pay your VAT on 7 May.
Software and tools only go so far
There are plenty of tools to help you with your bookkeeping, but they are limited when it comes to basic company filing duties. Some of these tools are:
- And others
What these don’t offer you is timely reminders to get the above done. They also don’t take the actual duty of doing it off your hands — you still need to sit down and crunch the numbers yourself. This takes time.
None of the tools above will prepare returns or filings for you (Company Accounts, CT600, etc.) other than your payroll and PAYE. The main function of these tools, really, is basic bookkeeping.
Tax filing for directors
Directors of a Company must also file a Self Assessment Tax Return for the period of earnings of 6 April to 5 April of the following year. These earnings must be declared to HMRC by 31 January of the following year.
For example, if we were talking about the tax year of 6 April 2019 to 5 April 2020 (called the year “19/20”) then the Self Assessment Tax Return would be due by 31 January 2021.
When time is money, and the potential for errors
The above is a lot to keep track of, and all the paperwork takes away valuable time. If your time is more valuable than your money, the case for getting an accountant is an easily resolved one.
One of the things Pearl Accountants offers for people who do wish to be protected against huge accountancy fees for an investigation by HMRC is a Tax Investigation Cover.
As for tools such as QuickBooks, FreeAgent, and all the others mentioned above — these don’t offer expert advice from a specialist accountancy firm which knows of any reliefs or allowances that you might be eligible for, in order to minimise your tax bill as much as possible. At Pearl Accountants we also take the extra step of filing your Company Account Returns immediately, instead of 9 months later. This ensures you are always up-to-date and that you know in advance how much you owe the taxman.
Time is money, and errors in filing and payment can be catastrophic financially. Investing in a good accountant is just that, an investment in your business’s future.
Shoaib Aslam is the co-founder of Pearl Chartered Accountants, a UK-based chartered accountancy firm that has multiple locations across London. They are experts in helping startups and established businesses with all aspects of growth, strategy, scaling up, accounting and tax planning.