A company's accounts keep track of their financial transactions. Using standardized guidelines, the transactions are recorded, summarized, and presented in a financial report or financial statement such as an income statement or a balance sheet.
Some companies hire an accountant to do their accounts. An accountant is a practitioner of accounting or accountancy. In most jurisdictions, professional accounting bodies have standards of practice and evaluations for professionals that must be maintained. Accountants who have demonstrated competency through their professional associations' certification exams are certified to use the titles of:
- Chartered Accountant
- Chartered Certified Accountant
- Certified Public Accountant
These professionals are granted certain responsibilities by statute, an example is the ability to certify an organization's financial statements and may be held liable for professional misconduct.
Non-qualified accountants however may be employed by a qualified accountant, or may work independently without statutory privileges and obligations.
All registered companies in the UK are required to prepare annual accounts for Companies House and HMRC every year. The purpose of these accounts is to report the financial activity of a company for each 12-month financial year, and work out how much company tax they must pay to HMRC.
Company directors are legally responsible for making sure these annual accounts are completely accurate and submitted by the statutory filing deadlines. a copy must also be provided for each company shareholders.
Full annual accounts should include the following:
- A profit and loss account
- A balance sheet
- Notes about the accounts
- A directors’ report
- An auditors’ report (unless the company qualifies for exemption)
- Name and signature of company directors
A full set of annual accounts must be prepared by all companies, only with the exception of dormant companies and small companies. If a company is dormant then it must file dormant company accounts consisting of a balance sheet and notes about the accounts. Likewise, small companies can file abbreviated accounts to Companies House, consisting of a balance sheet and notes, however they must deliver full annual accounts to HMRC with their Company Tax Returns.
All active UK limited companies (and some dormant ones) must file Company Tax Returns, typically, every year. As a company director or shareholder, you will want to make sure your Company Tax Return is filed properly and on time, which will enable your company to meet its legal obligations and avoid late penalties.
You will also want your Company Tax Return to make the most of any allowances and choices you can make to minimise your total Corporation Tax liability.
Company Tax Return deadlines and dates - When you start a new company, you must inform HM Revenue & Customs (HMRC) within three months of starting trading. As part of this, you tell HMRC what date you intend to prepare your financial year-end results for them. HMRC uses this information to provide you with information as to when you need to complete a Company Tax Return.
The Company Tax Return normally covers a 12-month tax accounting period that matches your company’s 12-month financial year. If your accounts cover less than 12 months, your tax accounting period will match this. However if your company’s accounts cover longer than 12 months, this is split into two tax accounting periods and you will need to file two Company Tax Returns; one for the first 12 months and the second for the remainder.
Every Company Tax Return must be filed within 12 months of the end of the relevant tax accounting period.
Company tax payments are generally due nine months after the end of your tax accounting period — before your Company Tax Return is due. The exception is that companies with profits of more than £1.5m pay company tax in instalments instead.
Company profits adjustments - The Company Tax Return is based on the profit and loss shown in your financial accounts, but these need to be adjusted to allow for the different way in which Corporation Tax reliefs and allowances are treated.
The Company Tax Return must include a tax calculation, showing how the profits in your financial accounts have been adjusted to work out the taxable profits included in the Corporation Tax Return. For example, you can only deduct allowable expenses when working out your profits, and use set capital allowances rather than your own depreciation charges for assets such as equipment and premises.
Corporation Tax Return filing - All Company Tax Returns for accounting periods must now be filed online.
If you plan to file your Corporation Tax Return yourself, you’ll need to set up an online account with HMRC. You’ll also need to download HMRC’s software or get commercial software that can file the Corporation Tax Return in the format HMRC requires. Read about filing your Corporation Tax Return on the HMRC website.
You must file the Company Tax Return, together with your tax calculation and financial accounts. If you need to make any later changes, you can do this up to 12 months after the Corporation Tax Return filing deadline. You must tell HMRC if you discover any errors after this, even though it is too late to amend your Company Tax Return.
Most companies find it easiest to use an accountant to handle their Corporation Tax Returns. As well as dealing with the complexities of preparing accounts and filing the Company Tax Return, you can expect your accountant to make sure you are making the most of Corporation Tax allowances and reliefs.