Filing the year-end accounts can feel intimidating, particularly if you are new to being a limited company director. There are a lot of moving parts for sure, but with due preparation and the help of an accountant, you will be all set for HMRC. In this blog post, we offer a quick breakdown of what you need to know:
What information do I have to report as a limited company?
At the end of your company’s financial year, the government requires all limited companies to prepare complete annual accounts (also known as statutory accounts) and a company tax return. Let us look at these in more detail. Your annual accounts consist of the following:
- A director’s report
- Income statement, showing the profit or loss made during the financial year
- Statement of financial position, indicating the company’s cumulative value based on assets, liabilities, reserves and capital (this is also known as the balance sheet)
- Footnotes on any transactions between the company and its directors, such as loans or advances they have taken out
And your company tax return (CT600) details your income and expenses, and the balance (your profit) is used to determine how much corporation tax you owe, if at all. In addition, if you are using FRS 105 to prepare your annual accounts, you must submit your statement of financial position and footnotes to Companies House to be published online and viewed by anyone.
What are the key financial reporting deadlines in the UK?
You are required to submit your reports to both HMRC and Companies House. The deadlines are different, so pay attention to this part! Here is what you need to know.
Companies House
You must file your first set of accounts as a limited company within 21 months from registering with Companies House.
You will need to file your annual company accounts within nine months of the end of your company’s financial year.
HMRC
You need to pay corporation tax (or declare that you do not owe any) within nine months and one day after the end of the accounting period for corporation tax.
You need to file your company tax return within 12 months after the end of the accounting period for corporation tax.
What happens if I miss the year-end limited company accounting reporting deadline?
HMRC and Companies House are strict about deadlines – if you miss them, you must pay the penalty! The later you are, the more you will have to pay. Here is what the HMRC late penalties look like:
- One day – £100
- Three months – a further £100
- Six months – 10% of any unpaid corporation tax
- Twelve months – another 10% of any unpaid tax
You will get automatic penalty notifications for each delay. Also, if you submit your returns late three times consecutively, each of the £100 penalties is bumped up to £500.
Here is what the Companies House late penalties look like:
- Up to a month – £150
- One to three months – £375
- Three to six months – £750
- More than six months – £1500
Why not take help from Lyel Accountants? Our annual accounting services are reliable and can help you make better business decisions.
What other things do I need to keep in mind for the limited company?
As the director, here are some other factors you must consider for your company’s financial health:
1. Confirmation statement
Your company information must be confirmed with Companies House every year within 14 days of the due date (a year since your last confirmation statement or a year since your company was incorporated).
Remember to submit the confirmation statement even if the company is dormant. If you fail to do so, you could be personally fined in a criminal court, and your company’s name might be struck off the Companies House register.
2. VAT returns
While not strictly part of your year-end limited company accounting submissions, your VAT return will typically coincide with your company’s year-end, so it is something to keep in mind.
3. Supplier review
Incomes and expenses heavily influence your balance sheet. Your year-end is thus a great time to review your list of suppliers and buyers and possibly strike off those who overcharge or the buyers who are consistently late with paying your invoices.
4. Financial planning
Some advance planning as your year-end approach could help you save on taxes and spend more wisely next year. As a director, you can set up a pension with some income, or bring your partner/spouse into the company.
A handy checklist for your year-end accounts
We top things off with a list of everything you need to prepare for as your company’s year-end approaches:
1. Confirmation statement
You definitely do not want to leave your company accounts until the last minute. We recommend allowing yourself at least a month to complete all the paperwork and filing.
2. Update your employee records
Make sure that your employee data at the end of the year reflects all the recruitment you have done throughout the year and includes all employee expense claims, NIC data and other relevant details.
3. Have back-ups of everything
Keep backing up all your limited company financial statements and other documents as you go. If you do not, you must start from scratch in case your software crashes!
4. Make a note of all deadlines
As discussed above, the deadlines for submitting to HMRC and Companies House are not always the same. You want to keep track of what is due when and also make sure that you are not waiting until the deadline to submit.
Hire a professional if you are uncomfortable with filing the documents on your own. And if you know you will take longer than the deadline, apply for an extension well in advance.
5. Gather all relevant documents
Get a hold of all paper and online documents related to your company’s accounts, from invoices and receipts to bank statements and credit card statements.
6. Reconcile your bank transactions
It is vital that the transactions you have recorded match what appears on your bank statements. With the help of an accounting tool, you will want to reconcile these and rectify any errors.
7. Chase down any invoices that are due
Unpaid invoices will skew your limited company financial statements and balance sheet at the end of the year, so make sure you follow up on them and collect the money. Be as persistent as you need to be!
8. Figure out which expenses are allowable
In general, any expense you have incurred directly for the business is allowable in that you can offset it against corporation tax. Lyel Accountants can help you claim all allowable expenses you are entitled to (and there may be several you were unaware of!).
Over to you
In conclusion, filing your limited company’s year-end accounts can be time-consuming, but with a clear head and adequate preparation time, you will be well on your way.
An accountant can help you prepare your books, submit everything on time and stay within the letter of the law – and as we have seen, the consequences of not doing so can be sizeable! They can also advise on an accounting software that will help you to keep everything in order.
As a company director, consider hiring a professional – you will rest easy knowing that HMRC and Companies House will be happy, and you are free to focus on running the company. Contact us today to find out more.
Frequently Asked Questions (FAQs)
If you are a building contractor using subcontractors, then potentially yes. You need to file your CIS monthly return within 14 days after the end of the tax month (ending on the 5th of the month). Submit your returns for the previous month to HMRC by the 19th of the current month following the last tax month.
HMRC is extremely strict about all returns! Failing to submit your CIS return on time could lead to monetary penalties or stricter legal action, depending on how late you are. Bear in mind that even if you have not paid any subcontractors in a given month, you still need to file a ‘nil’ return – you can’t skip a month for any reason whatsoever. If you will not be hiring any subcontractors for a while, you can submit a request to HMRC to mark your account temporarily inactive.
