How to avoid late filing penalties

How to avoid late filing penalties

Last year, more than 25,000 companies faced late filing penalties after missing the filing deadline.

Financial year-end reporting is a legal requirement for limited companies. If you run a limited company, then at the end of your financial year you must send certain information to both HMRC and Companies House. 

Year-end reporting is a legal requirement, both to ensure that the company pays the right amount of tax, and to provide correct information about the company that is accessible to banks and other agencies.

Usually, your accountant will be responsible for submitting your accounts but it is crucial that company directors have a solid grasp of what it involves to make the process as smooth as possible.

What do I need to report?

You must send your Company Tax Return to HMRC and your Statutory Accounts to Companies House. Sometimes you can make both these submissions together.

Your Company Tax Return (CT600) is what you send to HMRC. It includes information about turnover, expenses, tax allowances and profit, in the form of the company’s Statutory Accounts. HMRC uses these details to calculate how much you owe in corporation tax. 

Your Statutory Accounts (also known as your Annual Accounts) are what you send to Companies House. Their purpose is to describe clearly the company’s financial activity in that year, mainly for the benefit of HMRC a. Statutory accounts are a summary, so describe overall outgoings and income rather than individual transactions.

What are the deadlines?

You must send your first accounts to Companies House 21 months after your company’s registration date. You must file annual accounts with Companies House nine months after the end of your company’s financial year. 

HMRC demands corporation tax payments nine months and one day after the end of your company’s financial year, and your company tax returned should be filed with HMRC 12 months after the end of your accounting period. 

What if I miss a deadline?

There are consequences to missing payment deadlines. If you’re one month late you will face a fine of £150 and if you’re six months late it will be £1500, with varying amounts in between. 

How to avoid late filing penalties 

So what do you need to do to avoid late filing penalties? Here are our top tips:

  1. Plan

If you’re a small company, remember that you are no longer able to file abbreviated accounts. Don’t leave it too late. Mistakes can be costly because they will need correcting. All these delays can add up to late filing!

2. Use digital filing

Most companies can file accounts electronically with accounting software. With Making Tax Digital, many businesses are already doing this. If you don’t do this already, then find out more. Here’s our blog on why we use Xero.

3. Set email reminders

When you’re working hard, it means time often flies. Before you know where you are, weeks and months have seemingly disappeared. So signing up to email reminders really help. Here’s how to do it.

4. Don’t be rejected

If you don’t provide all the information required, Companies House will reject your details until you provide what’s necessary. Make sure everything’s in place so the process isn’t slowed down.

5. Paper accounts delays

Some businesses file paper accounts and these take longer to process. We advise using accounting software. But if you’re submitting paper accounts, it can take an extra five days. Make sure you build in that time or you may face a penalty!

For advice about filing accounts, contact our team today.