Essential business tax compliance for limited companies
Managing a limited company requires meticulous attention to regulatory obligations, particularly with regard to tax and accounting. Business tax compliance and financial compliance is punctuated by a series of key deadlines and potential penalties for non-compliance. Demanding a proactive and informed approach from company directors. 
Here, we delve into the intricacies of these obligations, offering a comprehensive overview to help ensure your company remains in good standing.
Initial setup
Filing the first accounts with Companies House
The journey of compliance begins shortly after the incorporation of your company. Your first significant deadline is the submission of your initial set of accounts to Companies House, due 21 months from the date of registration.
This extended deadline for the first submission recognises the challenges new businesses face in establishing their operations and sets the stage for regular annual reporting thereafter.
Annual obligations
Annual accounts submission
After the initial submission, your company is required to file annual accounts within nine months following the end of its financial year. These accounts must provide a transparent overview of the company’s financial performance and position, encompassing elements such as the profit and loss statement, balance sheet, director’s report and, depending on the company’s size, an auditor’s report.
This documentation ensures stakeholders, including shareholders, creditors and regulatory bodies, have access to accurate information about the company’s financial health.
Corporation tax obligations
Parallel to filing annual accounts is the obligation to address corporation tax. Companies must calculate and pay this tax nine months and one day after the conclusion of their financial year. Importantly, this responsibility includes informing HMRC if the company believes it is not liable for any corporation tax, thus avoiding penalties for presumed non-payment.
Company tax return
A critical component of tax compliance is the filing of the company tax return with HMRC, which is due 12 months after the end of the accounting period for corporation tax.
This return is comprehensive, detailing the company’s tax liability based on its annual financial report and calculations. It’s a fundamental process for declaring tax obligations to HMRC and requires precision and thoroughness.
Understanding penalties for non-compliance
Penalties for late filing
The consequences of missing filing deadlines are significant and tiered based on the delay.
For corporation tax, the following applies:
- 1 day late: £100
- 3 months: Another £100
- 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
For statutory accounts with Companies House, the following applies:
- Not more than 1 month: £150 for a private company or LLP (£750 for a public company)
- More than 1 month but not more than 3 months: £375 for a private company or LLP (£1,500 for a public company)
- More than 3 months but not more than 6 months: £750 for a private company or LLP (£3,000 for a public company)
- More than 6 months: £1,500 for a private company or LLP (£7,500 for a public company)
Penalties for late payment
Late payments of taxes incur interest charges at a rate of 7.75%. This applies to various taxes, including corporation tax and income tax, and underscores HMRC’s stringent approach to tax collection.
Failing to make tax payments can lead to severe consequences, ranging from intervention by debt collection agencies to the potential liquidation of the company, illustrating the critical nature of timely tax payments.
Importantly, all companies, including dormant and non-trading entities, are required to submit a confirmation statement at least once a year. This ensures the accuracy of the information HMRC have on record for your company.
Although there is no penalty for late filing, it is mandatory to submit a confirmation statement even if there have been no changes to your company during the review period.
Additionally, you must declare that the planned future activities of the company are lawful. This requirement is applicable to all confirmation statements dated 5 March 2024 or later.
Strategies to avoid penalties
Avoiding penalties and ensuring compliance is not just about adhering to deadlines; it involves strategic planning and best practices, including the following…Continue reading our guide to essential business tax compliance for limited companies
If you would like to discuss your business tax obligations please contact us, we’re here to help you.