Limited company filing responsibilities

Maybe you’re considering setting up a limited company. Perhaps you've already done so, but now find you’re being swamped by letters from HM Revenue & Customs and Companies House.

Setting up a company is quick and easy, but it creates a range of administrative responsibilities. For example, as an accountant specialising in start-ups, I often hear from people who are late filing their accounts or annual return, but have no idea of the consequences.

Intended only as a basic introduction, if you set up a limited company, you will need to complete:

• Annual return

This is a snapshot of information about your company (eg shareholders, directors, etc). This if often confused with the accounts, but it’s very different. This must be filed at Companies House together with a fee of £14 if filed electronically or £40 if on paper.

• Annual accounts

Although Companies House only requires an abbreviated set of accounts to be filed, which look easy to prepare, HMRC requires a full set of accounts, including a detailed profit and loss account and director’s report.

Companies House and HMRC are very different government departments. They do not work together, so don’t assume that just because you have filed information with one, the other will automatically get it.

• 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 straightforward form, so unless you have the necessary experience, it’s best left to an accountant.

• Annual self-assessment

Regardless of how much they earn, each company director may have to complete a self-assessment showing all of their income, not just that received from the company.

• Annual employer returns

Any business that employs staff has a number of reporting requirements. Employer returns include P35, P14, P11D, etc.

• Quarterly VAT returns

Any business, not just companies, whose turnover exceeds the VAT threshold in the previous 12 months must register and account for VAT. The biggest mistake made here is assuming that the need to register relates to the accounting year, rather than the previous 12 months from the current date.

Registering for VAT means having to complete an online quarterly VAT return (from April 2012 all VAT-registered businesses, apart from a very small number of exempt businesses, will have to file their returns online). This is due at the end of the month following the quarter-end date. So it is essential that accounts are kept up to date so that this can be completed on time.

Late filing of any of the above returns will result in a fine, penalties and interest payments. In the case of your accounts, both Companies House and HMRC can fine you. Fines start at £100, while punishment for significantly late filing of documents includes criminal conviction.

It doesn’t end there, of course. Even when you’ve stopped trading, you must file dormant accounts each year. And if you decide to close the company down, there is an even more long-winded process to follow.

Administrating a company for tax can cost you a significant amount of time and money to meet the plethora of filing responsibilities. This cost is tax allowable, of course, except for fines. And in many cases there are tax advantages to operating as a limited company. However, just make sure you know what you are getting into before you start, that way there won’t be any great surprises later on.

You may also be interested in:

• Q&A: Tax returns
• Q&A: PAYE Schemes
• Q&A: VAT registration