What do HMRC need from a new company?

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Emily Coltman FCA, Chief Accountant to FreeAgent – who provide an award-winning online accounting system for small businesses – explains what companies must send to HMRC and when.

Registering the company

HMRC are automatically notified when a company is formed at Companies House, so about three weeks after registering your new company, you will receive an introductory letter from HMRC.

If your company is dormant, simply write back to HMRC at the address shown on this letter to tell them so. You won’t then need to file any tax returns for your dormant company unless and until it starts trading.

Corporation tax return

A company must file a tax return, form CT600, every year with HMRC. This must be filed within 12 months of the end of the accounting period – usually a year – that the return covers. The CT600 must be filed online, either using HMRC’s own basic software or commercial software such as TaxCalc, and it must have a set of accounts attached to it, which must be in iXBRL format.

Any corporation tax that the company owes must be paid by 9 months and a day after the end of the year. So for example, a company that prepares accounts to 31st March each year will have to file its CT600 for the year to 31st March 2013 by 31st March 2014, but the tax is due sooner – by 1st January 2014.

No form CT600 may cover more than 12 months, which can create extra work for a new company, because the first accounting period will almost certainly be for longer than 12 months. This is because when a new company is formed, Companies House set the first year end to be a year from the end of the month in which the company is formed.

For example, my own company, Accounts in English Ltd, was formed in mid-February 2007. Companies House set its first year end as 29th February 2008. That meant the first accounts covered a period which was just over 12 months long, so the company had to file two forms CT600 for that period.

How the long first period is broken down for the CT600s depends on several factors, but most commonly it depends on when the company began to trade.

If the company began to trade as soon as it was incorporated, the first CT600 will cover the first 12 months – to the day – that the first set of accounts cover, and the second CT600 will cover the rest of the period covered by the accounts, even if that is only a few days or a couple of weeks. In this case, the figures from the accounts will be time-apportioned over the two CT600s.

If the company did not start to trade at once, the first CT600 will cover the period up to the date when the company began to trade, and the second CT600 will cover the period from when trading started. In this case, the first CT600 will show all the figures for the company – sales, profit etc – as £nil.

I recommend asking an accountant to prepare and file your company accounts and forms CT600, because there are tax pitfalls that can trap unwary directors.

Tax returns for directors

In nearly all cases, each director of the company must also file a self-assessment tax return each year, which will show salary and dividends from the company, and other sources of income too.

Directors who do not already file tax returns when they are appointed as directors must register for self-assessment with HMRC.

Emily Coltman FCA is Chief Accountant to FreeAgent, who provide an award-winning online accounting system designed to meet the needs of small businesses. Try it for free at www.freeagent.com

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