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Overlooking any of these filings, or missing key deadlines, can bring a range of fines and penalties your way, so let’s take a look at the four main reporting obligations small businesses need to be aware of.
Limited companies must compile their financial records into a set of statutory accounts each year (or get a small business accountant to do this for them). These must be filed with Companies House within nine months of the end of the company’s financial year, and a copy must also be sent to every company shareholder.
The full set of statutory accounts should include:
For tax years that began before 1st January 2016 small businesses had the option to file a shortened version of the statutory accounts, known as abbreviated accounts, but this option has now been replaced with abridged accounts.
With abbreviated accounts, small business accountants would compile a full set of statutory accounts for a company’s shareholders, but file a much simpler, abbreviated version with Companies House that included only the bare minimum information required (and expunged most of the business’s commercially sensitive information).
This abbreviated option has now been superseded by abridged accounts, which take a slightly different format. Rather than compiling two sets of statutory accounts (a full set for shareholders and an abbreviated version to file with Companies House), with abridged accounts accountants can create a single set of accounts.
Abridged accounts can include an abridged balance sheet, an abridged profit and loss account, or both. The same set of accounts can be sent to shareholders and filed with Companies House, forgoing the need to create a second set.
As with the full statutory accounts, the deadline for filing abridged accounts with Companies House is nine months after the end of the company’s financial year.
Limited companies must file a company tax return with HM Revenue & Customs each year, which will include a summary of the company’s financial performance during the relevant accounting period, adjustments for allowable tax reliefs and tax credits, and a final tax calculation confirming how much Corporation Tax the company owes. Limited companies must file a company tax return even if they made a loss and/or do not owe any Corporation Tax.
The deadline for filing a company tax return is 12 months after the end of the company’s accounting period (which is normally its financial year). However, it’s important to point out that although the Corporation Tax calculation is included in the company tax return, Corporation Tax actually needs to be paid sooner than the company tax return deadline – within 9 months of the end of the accounting period, rather than 12 months.
The final reporting obligation is one that has tripped up many first-time entrepreneurs, with potentially serious consequences.
In addition to filing statutory or abridged accounts and a company tax return, limited companies must also file an annual return with Companies House. Rather than reporting the company’s financial performance or calculating its tax liabilities, the annual return is intended to ensure Companies House has up-to-date records for the company.
To that end, the annual return must provide up-to-date details about:
Most new business owners know well in advance that they will need to file statutory accounts and a company tax return each year, or get an accountant to handle this for them. However, because they don’t report on a company’s financial performance or deal with the business’s tax liabilities, annual returns are less frequently discussed and many first-time directors are initially unaware they have this reporting obligation – an obligation that still applies even if the company is dormant.
The due date for filing an annual return is usually the anniversary of the company’s date of incorporation, and businesses can file up to 28 days after this due date. Failure to meet this deadline can result in a fine of up to £5,000, but more worryingly the company may also be struck off the register, a drastic step that Companies House has become increasingly willing to take.
If you are unsure about any of your reporting obligations, and would like an expert to help keep you on the right track, Accounts and Legal is here to help.
Our team of London accountants are experts when it comes to financial reporting, and we offer a full range of fixed-price tax, accounting and business planning services tailored to the needs of small businesses.
Get in touch with Accounts and Legal to discuss your requirements, or get an online quote now using our instant accounting quote tool.