Guide to Filing of Year-end Accounts for Limited Companies
For the first-time limited company directors, year-end appears to be a challenging endeavor. But from our detailed guide you’ll know what exactly you are supposed to do.
What is a Year-End Accounts?
The term’ year-end’ is used for the day when the financial period of your company ends. It’s also the day when the clock strikes for a limited company to send particular documents to HMRC and Companies House.
If you’re reporting on the financial period which starts on or after 1st January 2018, the Financial Reporting Standard 105(FRS 105) is levied and you’re required to file documents as mentioned in this article. If you’re reporting on or before this financial date, there would be different requirements of reporting.
To be filed with HMRC|Company Tax Return
Your Company Tax Return (CT600) consists of your company’s details about income, excluding your tax allowances and expenses. The remaining amount i.e. your profits will then be used for calculating the amount of Corporation Tax your company owes.
Annual Accounts (or Statutory Accounts)
The Annual Accounts submitted to HMRC is composed of three documents:
Income Statement – This document shows you the profit or loss you made for the period.
Statement of Financial Position – This statement will show you the business value subject to assets, liabilities, capital and reserves.
Footnotes – Advances, credit, and guarantees granted to directors, attached with financial commitments, contingencies and guarantees.
To be filed with Companies House
The FRS 105 rule suggests that from your Annual Accounts you are required to submit two documents: the Statement of Financial Position and the Footnotes. These will both be made public on the website of the Companies House.
What should I do to get prepared?
Before you make your Company Tax Returns and Annual Accounts ready, there are a few steps of housekeeping you need to do:
Make your expenses in order
When you claim every pound as a legitimate business expense will be the pound taken off your company profits, and less profit means you’ll pay less Corporation Tax.
Not certain if you can claim something? HMRC’s rule is that expenses must be “exclusively and wholly” for business use, so for your business if you bought something particularly—no matter how peculiar-you can likely to claim it as an expense.
Your accountant will be able to assist you if you’re uncertain of what you can and can’t claim. Get in touch with your accountant in order to sort out your expenses.
Round up those overdue invoices
You must have your year-end as accurate as possible, so turn your debt collector a few weeks in advance and pursue any unpaid invoices you may have.
After having the money in your company bank account, you need to properly record it and reconcile your accounts in your accounting software, ensuring they’re 100% accurate.
Gather all your paperwork
As you know that accounts don’t mean squat without records to support. Before you’re going to file your year end, make sure you have each and every record for everything—this can mean obtaining statements of account from bank and credit card statements from financial institutions, from suppliers and records of any other income you obtain.
What about the deadlines?
HMRC must have your Company Tax Returns within 12 months after your accounting period ends. Any Corporation Tax due requires to be paid to HMRC within 9 months and one day after this period.
Your annual accounts are required by the Companies House within nine months of your year end (means within 21 months of your date of registration if it’s your first return).
What happens if I miss the deadlines?
To persuade limited companies for filing everything on time, penalty regimes have been set by HMRC and Companies House for those who miss the deadlines. These penalties will get increased in time, so, if you’re consistently delayed to the filing party, you can expect it to cost you expensively.
Late filing penalties issued by HMRC
Time after your deadline
|6 months||HMRC will estimate your Corporation Tax bill and add a penalty of 10% the unpaid tax|
|12 months||Another 10% of any unpaid tax|
Note: If your tax return is late 3 times in a row, the £100 penalties are increased to £500 each.
Late filing penalties issued by Companies House
|Time after the deadline||Penalty|
|Up to 1 month||£150|
|1 to 3 months||£375|
|3 to 6 months||£750|
|More than 6 months||£1,500|
Note: You can be fined and your company struck off the register if you don’t send Companies House your accounts or confirmation statement.
What else do I need to look at?
If you have your company’s VAT registered on either the Flat Rate Scheme or the standard scheme, you will most possibly have a VAT return due at the same time as your year-end. VAT returns aren’t often considered to be as part of a year end, but they normally coexist with one.
Once a year, as a director of a limited company, confirm your company information with Companies House. If you fail to file a Confirmation Statement, the result will be that the directors will be fined personally in criminal courts and companies name would get struck off from the register.
The Confirmation Statement needs to be filed by you at least once a year and within 14 days of its due date. The due date is usually a year after your incorporation or the last date you complete a Confirmation Statement/Annual Return. You must submit a Confirmation Statement even if the company is inoperative.
The run up to your year end is a good time to think about some tax and financial planning. This can help reduce your tax bill in the near future and in the long-run. Avenues include paying money into ISAs, taking on-board your partner or spouse into your business and directing some of your income into a pension.
Review your suppliers
Reviewing your service providers once a year is a perfect idea to ensure you’re getting value for money — why not do it at your end of the year? This way you can discard any unnecessary or overpriced suppliers and start all over fresh in the new financial year.
Looking for help?
The guide list is completely advisory and it is always recommended to you to speak to an accountant for complete in-depth information. If you’re not having an accountant or are looking to switch, you can call us on: 020 3004 9303 or arrange a free consultation.