We have previously looked into what deadlines and penalties there are for areas such as self-assessment and VAT, however we have not looked into the obligations of a limited company. As limited companies rise in popularity, it is important to know what you need to do to be compliant with Companies House and HM Revenue and Customs (HMRC) in order to avoid receiving penalties.

Informing HMRC that you are liable for corporation tax

One thing you should do when you begin trading with your company is inform HMRC that you are trading. This needs to be done within twelve months of the end of your accounting year.

Unless you have a reasonable excuse for not informing HMRC, they will impose a penalty based on a percentage of the tax you should be paying known as potential lost revenue (PLR). This percentage can range from 30% to 100% depending on if you deliberately did not inform them or even tried to conceal the fact you are trading.

Corporation tax return and company accounts

Corporation tax returns and must be completed within twelve months of the company’s financial year end. The penalty for late filing starts as £100 followed by a further £100 after three months. If you still haven’t filed by six months then HMRC will predict your tax bill and add 10% as a penalty followed by a further 10% when the return is twelve months late.

Company accounts and computations must be filed alongside the tax return so fall under the same deadline and penalties.

Paying corporation tax

Corporation tax must be paid within nine months and a day of the company year end. This is unusual as the payment deadline is earlier than the tax return filing deadline. Because of this, it is simpler to try and get both done within nine months of the company year end. Late payment can lead to interest being charged to the tax due.

Company abbreviated accounts

Companies House requires an abbreviated version of the company accounts to be filed in addition to the filing done with HMRC. For the first year of a company this needs to be filed within twenty-one months of the day the company was registered with Companies House. For later years the deadline within nine months of the company year end.

The penalty for failing to file in time begins at £150 for up to a month late, then £375 for up to three months late. This penalty increases to £750 for between three and six months late and reaches £1,500 is you are overdue by more than six months. these penalties will be doubles

Annual return/confirmation statement

The annual return (or confirmation statement, as it is now being called) is another yearly obligation that has to be filed. Unlike the accounts, this just shows details such as the shareholders and officers of the business as well as people with significant control.

This is normally due on the anniversary of the formation of your company, with fourteen days being given to get it completed. If the date on it is changed to a different date, that becomes the new day the confirmation statement is due.

Failing to file this on time is a criminal offence and can range from your company being dissolved to the company and officers being prosecuted.

More information on Companies House filing penalties can be found by clicking here and information on HMRC penalties can be found by clicking here.

If you feel you have been wrongly charged a penalty, you can find information on how to appeal by clicking this link.

If you have any questions regarding the above or limited companies in general, please feel free to get in contact with us.