A company year end can be a daunting undertaking for first-time limited company directors, but with our comprehensive checklist, you’ll know exactly what you need to do.
What is a company year end?
A company ‘year end’ is the date your company’s accounting period ends. It’s also the date the clock starts ticking for a limited company to send certain documents to HMRC and Companies House.
Please note that this is just an overview of what’s required for your year-end accounts – a good accountant can help you understand what you need, or you can plough through the detailed guidelines on the gov.uk website.
What needs to be filed with HMRC?
Company Tax Return
Your Company Tax Return (CT600) contains details of your company’s income, less any tax allowances and expenses. The remaining amount – your profit – will then be used to calculate how much Corporation Tax your company must pay.
Annual Accounts (aka Statutory Accounts)
The Annual Accounts you need to submit to HMRC are made up of the following:
Income Statement – This document shows the profit (or loss) you made for the accounting period.
Statement of Financial Position – A snapshot at your company’s accounting period end date showing the cumulative value of a business based on its assets, liabilities, capital, and reserves.
Footnotes – Information about the transactions between your company and its directors (such as loans, advances and guarantees).
What needs to be filed with Companies House
If you prepare your annual accounts using the financial reporting standard for micro-entities (FRS 105) then you need to submit two documents from your Annual Accounts to Companies House: the Statement of Financial Position and the Footnotes. The documents you submit will be published by Companies House on its website and can be viewed by anyone.
What should I do to get ready for my Company Year End?
Before you can prepare your Company Tax Return and Annual Accounts, there are a few bits of housekeeping you need to take care of.
Get your expenses in order
Every pound you claim as a business expense is a pound taken off your company profits, and less profit means less Corporation Tax to pay.
Not sure if you can claim something? HMRC’s rule is that expenses must be “wholly and exclusively” for business use, so if you bought something specifically for your business – you can probably claim it as an expense.
Round up those overdue invoices
Your company year end should be as accurate as possible, so turn debt collector a few weeks beforehand and chase up any unpaid invoices you may have. Once you have the money in your company bank account, you can reconcile your accounts in your accounting software, making sure they’re 100% accurate.
Collect all your paperwork
When you’re putting your company accounts together you’ll need to make sure you’ve got all the records and receipts you need to back them up. Before filing your company year end, make sure you have records for everything – this can mean getting statements of account from suppliers, copies of bank and credit card statements from financial institutions, and records of any other income you receive. You need to keep company records for at least six years from the end of the company accounting period they relate to.
What are the deadlines?
The deadline for your tax return is 12 months after the end of the accounting period it covers. You’ll have to pay a penalty if you miss the deadline. There’s a separate deadline to pay your Corporation Tax bill. It’s usually 9 months and one day after the end of the accounting period.
Companies House requires your annual accounts within nine months of your year end (within 21 months of your registration date if it’s your first return). We’ve got an article with all the deadlines and dates you need to know as a limited company director.
What happens if I miss the deadlines?
To encourage limited companies to file everything on time, HMRC and Companies House have penalty regimes for those who miss deadlines. These penalties increase with time, so, if you miss deadlines on more than one occasion, you can expect it to cost you dearly, as shown below.
Late filing penalties issued by HMRC
1 day late = £100
3 months late = Another £100
6 months late = HMRC will estimate your Corporation Tax bill and add a penalty of 10% the unpaid tax
12 months late = Another 10% of any unpaid tax
If your tax return is late three times in a row, the £100 penalties are increased to £500 each.
Late filing penalties issued by Companies House
Up to a month late£150
1 to 3 months late£375
3 to 6 months late£750
Over 6 months late£1,500
If you file late two years in a row Penalties double
You can be fined and your company struck off from the Companies House register if you don’t send your accounts and/or Confirmation Statement when due.
What else do I need to think about?
VAT returns
If your company is VAT registered (on either the Flat Rate Scheme or the standard scheme), you will most likely have a VAT return due at the same time as your company year end. VAT returns aren’t often thought of as part of a company year end, but they usually coincide with one.
Confirmation Statement
As a director of a limited company, you need to confirm your company information with Companies House once a year. Failure to file a Confirmation Statement can result in directors being fined personally in criminal courts, and companies being struck off the Companies House register.
You need to file your Confirmation Statement at least once a year and within 14 days of its due date. The due date is normally a year after your incorporation or the date you last completed a Confirmation Statement. You must submit a Confirmation Statement even if the company is dormant.
Financial planning
The run-up to your year end is the perfect time to think about some financial and tax planning, This can help minimise your tax bill in the immediate future and also the long-term. Options include paying money into ISAs, bringing your spouse or partner into your business and channelling some of your income into a pension.
Review your suppliers
It’s a great idea to review your service providers once a year anyway to make sure you’re getting value for money – why not do it at your year end? That way you can ditch any overpriced or unneeded suppliers and start afresh in the new financial year.
Need some help?
This checklist is purely advisory and we’d always recommend speaking to an accountant for more in-depth information. If you don’t have an accountant or are looking to switch, give our friendly team a call on 079 5069 8462 or arrange a free consultation.
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