More often than not, aspiring entrepreneurs jump at the idea of registering a limited liability company in the UK as this provides various types of benefits to the entrepreneur. However, it is common for many investors to look at the potential benefits of registering a limited company in UK, without considering the added responsibilities and regulatory requirements associated with doing so. In this guide, we will discuss a number of regulatory requirements that comes along with registering a limited company in UK, and we believe that these need to be understood in advance to. This way, investors will not have any unwanted surprises after they commit to register a business in UK.

Submission of annual accounts

A limited company can choose an accounting reference date to suit their business operations, and upon choosing such a date, the company is required by law to file their annual financial statements within 9 months of the end of each accounting period. While you might think that this is not as stringent as it might sound, the failure to submit annual financial accounts within the stipulated time frame will end up in penalties.

Below is a guideline to the applicable penalties if annual financial accounts are not submitted within 9 months from the end of the accounting period.

  1. Up to one month late – £150
  2. One to three months late – £375
  3. Three to six months late – £750
  4. Over six months late – £1,500

Certainly, the last thing a new company owner would want is to pay penalties for not following the filing requirements imposed by the UK regulators. As such, we advise our readers to keep a tab of the deadline to submit annual financial accounts and stick by the same to avoid being exposed to such penalties from regulators. In the case of aspiring investors who are considering the options of registering a limited company in the United Kingdom, it’s important to know the regulatory requirements with regard to submitting annual financial accounts.

It’s important to consider the types of financial statements that need to be submitted as well.

Regardless of the size of the business, below financial statements should be submitted to the Companies House on an annual basis.

  1. Balance sheet
  2. Profit & loss account
  3. Notes to financial statements

Unless the company in question is a micro-entity, which is determined by the annual turnover, size of the balance sheet, and the number of employees, a director’s report should also be submitted to the Companies House on an annual basis.

The best way forward for a newly registered limited company in UK is to hire a professional accounting firm to file the reports on behalf of the company, which should prove to be efficient, error free, and timely.

Submission of the confirmation statement

A confirmation statement should be submitted by all limited companies in the United Kingdom on an annual basis. The primary objective of filing a confirmation statement annually is to confirm that the details provided to the Companies House are up to date. In case there have been changes to the data provided to the Companies House, certain measures should be taken in order to update the data held with the Companies House.

As many investors should already know, failure to submit a confirmation statement within 14 days of the review period is a criminal offense, and the directors of a company could be prosecuted for this.

The UK government website provides more information as to how the confirmation statement should be filed, and once again, we advise our readers to seek the assistance of a professional consultant if there are changes that need to be updated with the regulators.

Filing corporate tax returns

Tax requirements need to be assessed thoroughly before registering a limited company in the United Kingdom, and once a company is set up, there are strict guidelines to followed.

A limited company is required to register with the HMRC for tax purposes within 3 months from inaugurating business activities, and this could be completed online. Thereafter, a company is liable to file tax returns every 12 months even if the company does not have any taxable income. Filing tax returns is a mandatory requirement for loss making companies as well, so every company registered in the United Kingdom needs to adhere to this.

A point to note is that every company is liable to pay corporate taxes by the statutory deadline to submit annual financial statements, which is 9 months from the end of the accounting period. In this light, a company would more often than not pay taxes to the HMRC before it’s required to submit the tax files to the authority.

Below is a guideline for the corporate tax rates applicable to limited companies in the UK. Readers are advised to consult a tax consultant or visit the government website to learn more about how corporate taxes are calculated and the applicable rates.

(Source – UK government website)

In addition to filing corporate tax returns in the UK, companies are required to file Value Added Tax (VAT) returns on an annual basis as well.

In this article, we discussed the three main types of documents and filings that need to be submitted to relevant authorities on an annual basis as long as the company is active. In addition to these annual reporting requirements, there are a number of regulations governing the activities of limited companies in the United Kingdom.

To provide some perspective, every limited company registered with the Companies House is required to notify regulators of any material changes to the company, including but not limited to below.

  1. A change to the company name
  2. Change of address
  3. Issue of new shares
  4. Updates to the articles of association
  5. Appointment of a new director to the company
  6. Appointment of a new company secretary
  7. Termination of a director from the company

There are many instances in which the company management is obliged to update the Companies House and other regulatory bodies of changes to the company, and failure to abide by these guidelines might end up in fines or even the termination of the business license.

Before registering a limited company in the UK, it’s important to understand these reporting requirements associated with a limited company, and a thorough understanding of these requirements will prove beneficial for many years. The best practice however is to hire an experienced consultant who could provide valuable insights as to what needs to be reported and when, which should enable the company management to focus more on the business and less on the regulatory aspect of running the business.

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