Are you a business owner or part of an association operating through a Limited Company? If so, it’s important to know about filing company tax returns. Every Limited company in the UK is require to file a tax return each year. The only exception are dormant companies. If you have a dormant company you will need to write to HMRC at the end of the accounting reference date to inform HMRC that the Company was dormant during the year. Even if you have no Corporation Tax to pay or experience a loss, you still need to send a return. This process involves working out your profit or loss for Corporation Tax and calculating your Corporation Tax bill. You have the option to hire an accountant or do it yourself and you might be able to file your accounts with Companies House at the same time. However, it’s crucial to be aware of the deadlines and penalties for late filing.
Filing a company tax return
Overview
Filing a company tax return is an important responsibility that must be completed accurately and on time. In this article, we will discuss the process of filing a Company Tax Return, the penalties for late filing, and how to make changes if necessary.
Your company must file a Company Tax Return
As a company, it is mandatory for you to file a Company Tax Return by the due date. HM Revenue and Customs will generally send a ‘notice to deliver a Company Tax Return’ after the end of a company’s accounting reference date. This requirement applies regardless of whether your company made a profit or a loss, or if you have no Corporation Tax to pay. However, if you are self-employed as a sole trader or in a partnership, you do not need to file a Company Tax Return. Instead, you must submit a Self Assessment return.
Getting a ‘notice to deliver a Company Tax Return’
If you receive a ‘notice to deliver a Company Tax Return’ from HMRC, it means that your company is require to file a Company Tax Return. This notice will specify the deadline by which you must submit your return. It is important to carefully review the notice and make note of the deadline to avoid any penalties for late filing.
Filing a return even if you make a loss or have no Corporation Tax to pay
Even if your company made a loss during the accounting period or has no Corporation Tax to pay, you are still required to file a Company Tax Return. It is important to accurately report your financial information in your return, regardless of the outcome, as this is necessary for record-keeping and compliance purposes.
Exception for self-employed individuals or partnerships
If you are self-employed as a sole trader or in a partnership, you do not need to file a Company Tax Return. Instead, you must submit a Self Assessment return. It is important to understand the distinction between these two types of tax returns, as failure to file the correct return can result in penalties.
What it involves
Filing a Company Tax Return involves several key steps, including working out your profit or loss for Corporation Tax, differentiating it from the profit or loss shown in your annual accounts, calculating your Corporation Tax bill, completing the tax return itself. Once this process is completed, the corporation tax calculation, the completed company tax return and a copy of the company’s accounts will then be sent to HMRC electronically using either HMRC software or commercial software. In addition, you have the option to file your accounts with Companies House at the same time as your tax return.
Working out your profit or loss for Corporation Tax
In order to accurately report your Corporation Tax, you must first calculate your company’s profit or loss for Corporation Tax purposes. This calculation may differ from the profit or loss shown in your annual accounts, as there are specific rules and expenses that are deductible for tax purposes.
Differentiating from the profit or loss shown in annual accounts
It is important to understand the distinction between the profit or loss shown in your annual accounts and the profit or loss for Corporation Tax purposes. The two may not always align due to tax adjustments, allowable and disallowable expenses. It is crucial to accurately report your profit or loss for tax purposes to ensure compliance with tax rules.
Calculating your Corporation Tax bill
Once you have determined your company’s profit or loss for Corporation Tax, you can calculate your Corporation Tax bill. This involves applying the Corporation Tax rate that applies to your company’s taxable profits. It is essential to ensure that all calculations are accurate and in line with the current tax laws and regulations.
Choosing between an accountant or doing it yourself
Deciding whether to enlist the services of an accountant or prepare and file your tax return yourself is a personal choice. While an accountant can provide expert advice and ensure compliance, it will come at an additional cost. Alternatively, filing the return yourself can save money but requires a thorough understanding of corporation tax law.
Filing accounts with Companies House for limited companies
If your company is a limited company, you have to file your accounts with Companies House no later than 9 months after the year end. Most people file it at the same time as the company tax return and corporation tax computation. This streamlines the process and ensures that all necessary financial information is submitted to the relevant authorities.
Deadlines
It is essential to be aware of the deadlines associated with filing your Company Tax Return. The deadline for submitting your return is typically 12 months after the end of the accounting period it covers. Failure to meet this deadline may result in penalties for late filing. Additionally, there is a separate deadline for paying your Corporation Tax bill, typically 9 months and one day after the end of the accounting period.
In conclusion, filing your company’s tax return is a crucial responsibility that should not be taken lightly. By understanding the requirements, deadlines, and steps involved, you can fulfil this obligation accurately and on time. Whether you choose to seek professional assistance or handle the process yourself, it is important to ensure compliance with corporation tax law in order to avoid penalties.
