There are lots of benefits of owning a limited company over being a sole trader, from potential tax savings to protection of your personal assets. In order to take advantage of these benefits, there are certain statutory duties you must adhere to every year.
It’s important to note that most of these also apply even if the company is dormant or not actively trading, although the rules may vary slightly.
Here are the three main filing requirements you need to be aware of:
- Statutory accounts
- Corporation tax return
- Confirmation statement
The devil is in the detail, but we can make the process easy and painless
Whether you’re already a limited company business owner, or you’re thinking about registering one, some of these requirements can seem confusing and overwhelming. Don’t be put off when you see all the information below. We want to make sure you have an understanding of the whats, whens and hows of getting this sorted every year, but we can help take the process off your hands. Talk to us about getting support.
Statutory Accounts have to be filed with Companies House
Statutory Accounts (also known as annual accounts) are a set of financial reports prepared at the end of each trading year. They include a balance sheet, which shows the value of everything your company owns and owes, and a profit and loss account which shows your company sales, running costs and any profit or loss made over the financial year. Extra information has to be provided within the notes to the accounts, for example who controls the company.
The accounts need to be filed with Companies House within 9 months of your company’s financial year end. The rules are slightly different if it’s your first year of trading where the deadline is up to 21 months after the date the company was first registered with Companies House.
Although you can file paper accounts most people now submit them to Companies House online. Copies of the Statutory Accounts need to be shared with all shareholders of the Company.
HMRC also require you to file a Corporation Tax Return
A corporation tax return (also known as a CT600 or company tax return) is submitted to HMRC and shows your company’s income, expenses, profits and the amount of tax owed. This is worked out based on your taxable profits, which isn’t necessarily the same thing as the profit in your accounts. You need to adjust your profit for non tax items such as depreciation, and can then claim tax deduction for spend on capital items. This is done by claiming Capital Allowances – for example if the company has bought a van, or a computer, or office furniture.
Unlike the Statutory Accounts, your Corporation Tax Return has to be filed within 12 months of your company’s financial year end. The deadline for paying the tax owed is 9 months and 1 day after the financial year end. So you have to pay the tax before you have to tell HMRC how much you owe!. It’s important to ensure this isn’t left until the last minute so you can include paying your tax bill in your cashflow plans.
HMRC will send a yearly reminder by post to inform you they’re expecting you to file a tax return. You must still file a corporation tax return even if the Company has made a loss or has no tax to pay. Most companies now file their corporation tax return online, and you have to attach iXBRL tagged accounts.
Don’t forget about your Confirmation Statement
The Confirmation Statement confirms the details of the directors, secretary (if the Company has one), shareholders, registered office address, share capital and people with significant control each year. This used to be called an Annual Return.
This snapshot is submitted to Companies House, usually based on the anniversary of the day the company was incorporated unless you have chosen a different “made up to” date.
If you have selected Company Secretarial Services with us then this is a very simple procedure. All you need to do is check and confirm the details sent to you by email within a 2 week timeframe. Alternatively you should be able to file this online at Companies House.
Failing to file your Confirmation Statement is a criminal offence. Although there is no late filing penalty, non filing could result in legal action against the company or it even being struck off.
What if your company is dormant or not actively trading?
If the company is dormant, you are:
- Not employing staff
- Having no income or transactions going through a company bank account
- Not actively trading
The definition is really restrictive, even bank charges mean that the company is not legally dormant.
In this instance, you are still required to meet your annual filing obligations by submitting dormant company accounts.
Corporation tax returns
If the company is dormant or not actively trading then you may still have to file a nil corporation tax return. It is usually worth writing to HMRC to make sure they know you aren’t trading. They should then write to confirm that you don’t have to pay corporation tax or file company tax returns.
It’s important to note that trading includes buying, selling, renting property, employing someone or receiving interest. HMRC has detailed guidance on what counts as dormant for corporation tax purposes here.
Every company, including dormant and non trading companies, must file an annual Confirmation Statement.
There’s lots of talk about COVID-19 changing your filing requirements, but be wary
You may have heard from your mate down the pub (before 10pm of course) that the filing deadlines have changed…but there is a word of caution here.
Thanks to Coronavirus from 27 June 2020 you will get an automatic extension to your statutory accounts filing deadline. This is extended by 3 months where it falls between 27 June 2020 and 5 April 2021 inclusive.
This means that for a limited company, the deadline for filing accounts at Companies House is extended from nine months to 12 months.
Importantly though, the government hasn’t announced any extension to the deadline for paying your company’s corporation tax. That is still nine months and one day after your company’s accounting period end date. You will need your accounts prepared to know how much tax you will need to pay to HMRC so we would still advise getting your accounts done and filed within the normal 9 months.
Is that everything?
We haven’t even touched on areas like VAT, payroll, or directors own tax returns. Running a limited company isn’t for the faint hearted. Make sure you get the support you need at the right time.