The Tax Deadlines that Catch Out Every New Business

The Tax Deadlines that Catch Out Every New Business

Running your own business for the first time is a steep learning curve. As if there wasn’t enough to get your head around, tax deadlines seem intentionally designed to trip you up.

It’s no wonder why so many entrepreneurs rely on accountants to take care of their tax obligations for them so that they can focus on the business.

For brave souls who are taking their taxes into their own hands, we break down the key deadlines you need to be prepared for.

When you first set up a new limited company, you’ll automatically have different deadlines for Companies House and HMRC.

These can be changed in the future so that the dates coincide with each other, but for your first year, you’ll need to be on the ball.

  1. Annual Accounts due at Companies House

Your annual accounts should include a profit and loss statement, a balance sheet, notes about the accounts, a director’s report, an auditor’s report and the name and signature of company directors (you may not have to include everything on this list if you’re eligible for exemptions due to the size of the company or other reasons).

Companies House automatically creates a financial year-end date for your company when you incorporate.

This is set to be the last day of the month your company is registered. If you incorporated on the 1 January, your year-end date set by Companies House will be 31 January.

Filing for your annual accounts is usually 9 months after the end of your accounting period, except for the first year.

Your first annual account is different to all proceeding years because it is due exactly 9 months from the date of incorporation, which means your first annual accounts due at Companies House would be 1 September, then 31 September thereafter.

If you miss the deadline for filing your annual accounts the penalty ranges from £150 – £1,500 depending on how late you are.

  • Confirmation Statement due at Companies House

The confirmation statement is a declaration of key company information which needs to be kept up to date with Companies House (submitted at least once a year).

It needs to include details of your registered office, names and addresses of directors, a statement of capital and shareholder information, the company’s SIC code and a register of ‘people with significant control’.

Your first confirmation statement will be due 12 months from the day you registered your company with Companies House.

If you registered on 1 January, then it will be due 1 January the following year (watch out for leap years however!) and you will have 14 days after this date to deliver the statement to Companies House.

There are no automatic penalties for late submission of your confirmation statement; however, it is a criminal offence.

Companies House can therefore seek legal action against the directors which can result in a heavy fine, the company being struck off, or directors being disqualified from being company directors for up to 15 years.

  • Filing Company Tax Return with HMRC

The company tax return is a CT600 form which must be completed and submitted to HMRC together with a financial report and calculations to declare how much tax is due to be paid by the company.

This is due 12 months after the end of your accounting period. You’ll receive the dates of your accounting period by post once you have registered your company for Corporation Tax with HMRC.

Again, this can be changed if needed and so your accounting period for the first year of your company may cover more than a 12-month period.

Where this is the case, you will need to complete two company tax returns as the CT600 can only ever cover 12 months at a time.

For example, if you first incorporate on 1 January 2020 but you choose 31 March 2021 as the end date for your accounting period, your overall accounting period for the first year spans 15 months.

Your first company tax return will therefore need to cover the period between 1 January 2020 to 31 December and the second will cover the period for 1 January 2021 to 31 March 2021.

Both will be due at the same time which is 31 March 2022 (12 months after the end of the accounting period).

HMRC issues automatic penalties as soon as the company tax return deadline has passed. It’s £100 from the first day it’s late and can be up to as much as an estimate of your tax bill plus 20% on top of that.

Where you miss your tax return deadline three times in a row, the automatic £100 fine increases to £500 from the first day it’s late.

  • Paying for your corporation tax to HMRC

To make everything even more confusing to what we’ve just explained above, paying for your corporation tax has its own deadline separate to the filing of the company tax return.

You need to pay for your corporation tax 9 months and 1 day after the end of your accounting period.

Using the same example once again of the 1 January 2020 incorporation date and the 31 March 2021 as the end of the accounting period, your first corporation tax payment will be due 1 September 2021 (9 month and 1 day after 31 December 2020). Your next corporation tax payment will then be due 1 January 2022 which is 9 months and 1 day after 31 March 2021.

There are no late payment penalties for corporation tax, however interest is charged on the outstanding tax due. There are only penalties where companies underpay what is due.

For more information on tax and to discuss your needs go to https://www.ridgefieldconsulting.co.uk/

Simon Thomas

Simon is the founder and Managing Director of Ridgefield Consulting – Oxford’s leading independent firm of chartered accountants. Simon trained in Top 4 firm, EY, before launching Ridgefield Consulting in 2010, who now proudly support start-ups and small businesses to help them achieve their full potential.

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