Is it necessary for me to file a Company Tax Return?
Even if your company makes a loss or has no tax to pay, you must register for Corporation Tax and file a Company Tax Return with HMRC every year. The Corporation Tax filing deadline is 12 months following the conclusion of your company's accounting period.
In this piece, we'll go over what a Company Tax Refund is, how and when to file one with HMRC, and the penalties you could face if you submit your tax return late.
What exactly is a Company Tax Return?
A Company Tax Return is a set of financial documents that reflects income and expenses, profit or loss for Corporation Tax purposes, Corporation Tax liability, and other pertinent financial information to HMRC - the UK's tax department. You must include the following items while preparing a Company Tax Return:
entire annual accounts, including the directors' and auditors' reports computations indicating how the entries in CT600 and supplemental pages were generated from the statistics in the annual accounts
any other information pertinent to the company's tax liability
If you receive a 'Notice to Deliver a Company Tax Return,' you are required by law to deliver this financial evidence to HMRC.
How to Sign Up for Self-Assessment
If I have a limited firm, am I self-employed or employed?
Only corporations are required to file Company Tax Returns. If you work for yourself as a lone trader or through a partnership, you must instead file annual Self Assessment tax reports.
HMRC's Company Tax Return Guidance provides comprehensive information to assist you in completing your Company Tax Return. However, because it might be complicated, you should consult with an accountant or a professional tax consultant if you have any questions.
Do I have to register my business for Corporation Tax?
When you begin doing business, you must register your firm for Corporation Tax online. 'Doing business' entails:
carrying on a business or profession buying/selling goods or services for a profit hiring people advertising renting a place for commercial purposes managing investments earning income
When such actions occur, your firm is considered 'active' for Corporation Tax purposes and is required by law to register within three months.
How to Register for Tax After Creating a Corporation
When you file a Company Tax Return, you will determine how much (if any) Corporation Tax your company owes. Your tax bill is due 9 months and 1 day following the end of your Corporation Tax accounting period.
When and how to File a Corporate Tax Return
You must deliver your Company Tax Returns electronically unless your company is exempt from online filing. You can accomplish this by using either HMRC's online Corporation Tax filing service or proprietary third-party software provided by a commercial company.
When preparing your tax return, you will utilise the information from your yearly accounts to calculate your company's:
- Corporation Tax profit or loss
- Bill for Corporation Tax
You can hire an accountant to prepare and deliver your Company Tax Return, or you can do it yourself if you are confident in your abilities.
Generally, your Corporation Tax Return should be delivered no later than 12 months after the end of your accounting period. HMRC will mail you a 'Notice to Deliver a Company Tax Return' to your registered office address. This letter will indicate your filing deadline.
Your Corporation Tax accounting period
The time period covered by your tax return is known as your Corporation Tax accounting period. It will often be 12 months long and correspond to the fiscal year covered in your company's annual statements.
Your accounting term can be less than 12 months but not more than 12 months. However, in your first year of operation, your annual accounts may cover a period of more than 12 months.
In such cases, you must file two Company Tax Returns. One for the first 12 months, and another for the remainder of the time period covered by the annual accounts.
Penalties for failing to file your Company Tax Return on time
HMRC can levy significant financial penalties if your tax return is delivered late:
- 1 day late - automatic £100 fine
- Three months late - A further £100 fine
- 6 months late - 10% of the outstanding tax bill
- 12 months late - An additional 10% of your unpaid tax payment
If you file your tax return late for three years in a row, the £100 penalty will automatically escalate to £500.
If your Company Tax Return is incorrect, HMRC may levy a penalty. Furthermore, your company and its directors may be penalised if you enter incorrect information or conceal any profits or tax liability.