A company ‘year-end’ is the date that your company’s accounting period ends, as well as the date the clock starts ticking for a limited company to send certain documents to HMRC and Companies House.
This can prove daunting, especially for newly registered limited company directors, with the various preparations and tasks feeling overwhelming.
With this in mind, we recommend using the extensive checklist provided below, which will detail precisely what you need to do in understandable terms.
Due to the ongoing pandemic, HMRC has announced that from the 27th June, some companies will be granted an extension for their statutory accounts filing deadline.
The filing deadline is extended if it falls between 27th June 2020 and 5th April 2021, including these dates two dates.
This means that for a limited company, the deadline for filing accounts at Companies House is extended from 9 months to 12 months.
Company Tax Return- your Company Tax Return (CT600) contains details of your company’s income, less any tax allowances and expenses. The remaining amount (your profit) will then be used to calculate how much Corporation Tax your company must pay.
Annual Accounts (i.e., Statutory Accounts)- the Annual Accounts you need to submit to HMRC are made up of the following:
If you prepare your annual accounts using the financial reporting standard for micro-entities (FRS 105) then you need to submit two documents from your Annual Accounts to Companies House: the Statement of Financial Position and the Footnotes. The documents you submit will be published by Companies House on its website and can be viewed by anyone.
Before you can prepare your Company Tax Return and Annual Accounts, there are a few bits of housekeeping you need to take care of, including getting your expenses in order, rounding up overdue invoices and collecting all of your paperwork.
All business expenses claimed decrease your company profits, and less profit means less Corporation Tax to pay.
In this way, it is useful to make sure that you are claiming for all expenses that are exclusively for business use- for example, if you bought something specifically for your business, you could likely claim it as an expense.
Your company year-end should be as accurate as possible, chase up any unpaid invoices you may have in good time. Once you have the money in your company bank account, you can reconcile your accounts in your accounting software, making sure they are entirely accurate.
You should also make sure you have all of the records and receipts you need to back them up. Make sure you have records for everything – this can mean getting statements of account from suppliers, copies of bank and credit card statements from financial institutions, and records of any other income you receive. You need to keep your records for at least six years from the end of the company accounting period they relate to.
The deadline for your tax return is 12 months after the end of the accounting period it covers.
The deadline to pay your Corporation Tax bill is usually 9 months and one day after the end of the accounting period.
Companies House requires your annual accounts within nine months of your year end and within 21 months of your registration date if it is your first return.
If you miss the deadline, HMRC will deal a penalty of £100 after one day, with a further £100 charged if filing is still incomplete at the 3-month mark.
If 6 months go by, your Corporation Tax bill will be estimated and HMRC will add charge of 10%. A further 10% penalty will be added if a year passes.
It is also important to note that if your tax return is late three times in a row, then the £100 penalties will increase to £500.
Up to a month late
1 to 3 months late
3 to 6 months late
Over 6 months late
If you miss the deadline two times in a row then penalties will double.
Also, be aware that your company can be struck off from the Companies House register if you fail to send your accounts and/or Confirmation Statement by the deadline.
VAT returns- if your company is VAT registered (on either the Flat Rate Scheme or the standard scheme), you will most likely have a VAT return due at the same time as your company year end, so make sure to determine if this is the case.
Confirmation Statement- you must confirm your company information with Companies House annually, even if your company is dormant. Failure to do so can result in directors being fined personally in criminal courts, and companies being struck off the Companies House register.You need to do this within 14 days of the due date, which is normally a year after your company was legally registered, or the date you last completed a Confirmation Statement.
Financial planning- the run-up to your year end is the perfect time to think about some financial and tax planning, which can assist in minimising your tax bill. Options include paying money into ISAs, bringing your spouse or partner into your business and channelling some of your income into a pension. Gow and Partners would be more than willing to support you in this, offering professional, tailored advice.
For more information you can read the government's detailed guidelines
While this checklist is helpful for limited companies, it is not an adequate substitute for a good accountant, who can help you understand what you need. We would always recommend speaking to a professional for more in-depth information.
For queries regarding company year ends, new and existing clients can call our dedicated and highly qualifies team of accountants on 01254 589799.