Company year-end can feel like a big chore if you are a director of a limited company. It is a statutory task that directors must ensure takes place.
As a result of the coronavirus pandemic, HMRC announced that from 27 June companies have an extension to their statutory accounts filing deadline. If your deadline to file at Companies House falls between 27 June and 5 April 2020, it has been extended between 9 and 12 months.
Be aware that if your filing deadline falls on 6 April 2021 or later, no extension applies.
It is advisable to file your accounts at Companies House within 9 months of your company’s accounting period end date.
You will still need to pay your Corporation Tax within 9 months and 1 day after your company’s accounts period end date, as this hasn’t been extended.
So, with all this information in mind, you may wonder what company year-end entails, especially if you’re a new director.
Company year-end checklist
What to file with HMRC
- Company tax return: This is called a CT600 and contains details of your business’s income, less any tax allowances and expenses. Your profits are used to calculate how much Corporation Tax your company must pay.
- Annual accounts: These are also known as statutory accounts and need to be submitted to HMRC. They are made up of:
- Income statement — Your profit or loss is shown on this document for the relevant accounting period.
- Statement of financial position — This provides a snapshot of your company’s position financially at year-end. It shows your assets, liabilities, capital and reserves.
- Footnotes — You can include information about the transactions between your company and its directors, such as loans, advances and guarantees.
What to file with Companies House
Businesses that are classed as a ‘micro-entity’, which is explained here on HMRC’s website, need to submit two documents to Companies House: the statement of financial position and the footnotes.
These documents are then published by Companies House on its website and can be viewed by anyone.
What do I need to do for my company year-end?
To get your annual accounts and company tax return in order, you need to take make sure you have the following information:
Every expense that is claimed by the company is taken from your profits, which means less Corporation Tax to pay. The expenses must be ‘wholly and exclusively’ for business use, according to HMRC. If you are unsure we can help you with what you can claim.
Your company year-end needs to be as accurate as possible, so chase up any unpaid invoices. Once the money is in your bank account make sure you reconcile your accounts to avoid any future issues.
You must make sure that you have all your records and receipts when putting your accounts together. If you are claiming expenses for something, HMRC may decide to exclude it if you cannot prove where the money was spent.
Also, you should make sure you have records from suppliers and copies of bank and credit card statements along with other records of any other income you receive. Remember, that you must keep company records for at least six years from the end of the company accounting period they relate to.
Your tax return deadline is 12 months after the end of the accounting period it covers. If you miss this deadline you will be issued with a penalty. Your corporation tax deadline is usually 9 months and 1 day after the end of the accounting period. Companies House needs your annual accounts with 9 months of year-end.
If you fail to file in time, HMRC will issue penalties. If your year-end accounts are 1 day late, you will face a penalty of £100. There is another £100 penalty if you miss it by 3 months.
After 6 months HMRC estimates your corporation tax bill and adds a 10% penalty of the unpaid tax. If you fail to file within 12 months, HMRC will enforce another 10% penalty of unpaid taxes. If your tax return is late 3 times in a row, the £100 penalties increase to £500 each.
Penalties for late filing at Companies House range from £150 for being a month late to £1,500 for being 6 months late. These penalties double if you file late two years in a row.
You also face having your company struck off from Companies House register if you don’t send your accounts and/or confirmation statement when it is due.
There are other tasks to consider when filing year-end accounts, including financial planning and reviewing suppliers. If you have any questions or want to know more about your company year-end obligations, contact us today for help.