The taxable profits and investment income of a limited company are liable to corporation tax, although dividend tax is charged separately. When you start a limited company which is subject to this tax, you will also have to meet specific deadlines and fulfil some requirements.
Informing HM Revenue & Customs
Once the limited company is trading, you have to inform HMRC within three months. You can do this by registering your firm with the HMRC online service and once the registration has been processed, the company will be enrolled for CT online. You can use this service to register for VAT or PAYE if necessary. It is also possible to use the Companies House joint online registration service. If you use this tool, HMRC will automatically be notified, although you will have to register with the HMRC’s own service to file a corporation tax return online.
Once HMRC has received information about your limited company, it will issue a notification of the deadlines for the payment of corporate tax, as well as the submission of returns.
Registering with Companies House
Once a limited company becomes active, it must comply with regulations and submit specified documentation to Companies House. Every year, a business will be required to complete a company tax return. When your limited company is trading, you must inform Companies House, providing statutory information simultaneously if required. Companies House will then inform HMRC, which will set up a record and issue a Unique Taxpayer Reference. This number is unique to your company and should be retained. A form CT41G will be issued to the registered office of the company to be completed.
Corporation tax deadlines
Corporation tax is slightly different to income tax as the bill has to be paid before the company tax return deadline. Income tax self assessment and VAT are paid at the same time as the tax return deadline. Corporation tax has to be paid electronically and the deadline for this is known as the ‘normal due date’. For a limited company with profits of less than £1.5 million, the tax has to be paid by nine months and a day after the accounting period for your corporation tax has ended. A company with profits above that amount will generally pay in instalments, although there are exceptions.
Corporation tax can be complex and a new limited company may want to seek the advice of a professional to ensure everything goes smoothly.
Article by Karl Bilby, representing The Accountancy Partnership