Company accounts filing deadline

Company accounts filing deadline is set by Companies House on the day your company was incorporated. By comparison, the company accounts filing deadline for a private limited company and a public limited company is different. A private company has longer period to file compared to a public company.

For example, if your company is incorporated on 28 December 2018 and your default company accounting year end date is 31 December. This is same for both types of companies.

However, if your company is a private limited company, then your accounts filing deadline would be 30 September 2020. Which is nine months after your year end.

On the other hand, if your company is a public limited company then your default filing deadline would be 30 June 2020. which is six months and it’s shorter.

Change your year end date

You are allowed to change your company accounts filing deadline. In this case, you use the form AA01 to change your accounting reference date. You must submit the form with Companies House.

For one thing, your company accounts must not already overdue. Furthermore, your new accounts year end date must not cover period more than 18 months.

First company accounts filing deadline

The filing periods for first accounts for a private limited company is 21 months whereas for a public company is 18 months.

Your company accounts filed with Companies House is available for public to view. In other words, anyone interested in your company affairs can check your accounts with Companies House.

Audit or non-audit company accounts

Generally, a private limited company that meet the criteria of a small company is allowed to submit non-audit accounts with Companies House. In this case, you must opt to take advantage of the audit exemption. Accordingly, this fact must be disclosed in your company accounts.

Any other companies, medium sized or a large company and public limited companies, all must submit audited company accounts with Companies House.

The law governing the preparation of company accounts for a public limited company especially those with their shares listed in the stock exchange is vigorous. In this case, you are not only must comply with Companies House rules but also the Financial Conduct Authority (FCA) requirements.

Dormant company

Ordinarily, a dormant company registered as a public limited company must submit an audited company account. Even if your public limited company has no transaction whatsoever. In this situation, you must hire a qualified Auditor to take care of your company accounts.

You may re-register your public company to a private company is having a PLC status no longer serve your business.

On one hand, if your dormant company is a private limited company then you can file a non-audit dormant account.

Late filing penalty

You will receive late filing penalty if your accounts are filed late. The late filing penalty starts from £150 to a maximum of £1500 for a private company. It will cost you a lot more for a public limited company.

You may appeal to your late filing penalty If your circumstance causing the late filing is exceptional. In this case, you must write to Companies House explaining it. Even better if you have evidence to support your case. Otherwise, you would have no choice but to pay the penalty.

Submit your account soon after your financial year end. Don’t wait till last minute.

Types of company shares

There are four main types of company shares as defined by the Companies Act.

When forming your limited company, it is important to give a good thought about the types of company shares you are going to create and issue to your shareholders.

Your company may have as many different types of shares as you wish. Also, with different legal right and conditions attached to each type of share.

Ordinary share

The most common share type is ordinary share. This type of share has no special rights or restrictions. Thus, your company may divide the ordinary shares into classes of different values.

Preference share

Preference share carries a right that gives priority when come to annual dividends distribution before other classes of shares.

Cumulative preference

The next one is cumulative preference share. This type of share carries a right that if your limited company cannot pay the dividend in one year, it will carry it forward to successive years.

Redeemable share

Last but not least is the redeemable share. This type of share is issued with agreement that it will buy them back at the option of either your company or your shareholder after a certain period or on a fixed date. However, your limited company cannot only have redeemable shares.

Once you decided the types of shares your limited company are going to issue, you are to complete your statement of capital giving details of your shares types.

At every anniversary of your company incorporation, you are to update your statement of share capital whether there is any changes, as part of your Confirmation statement filing.

Admission to Stock Exchange

Public limited company must comply with the Admission to Stock Exchange listing rules before they are allowed to trade their shares publicly.

Your public limited company must provide information which satisfies the listing requirements. In this case, the Financial Services Authority set the rules and also governs public companies in the United Kingdom.

The Financial Services Authority is acting as the United Kingdom Listing Authority or UKLA.

Overall, there are two types Stock Exchange markets in the United Kingdom. The Senior Equity Market and the Alternative Investment Market (AIM).

Senior Equity Market

The Senior Equity Market is for larger public companies. It is also known as the Official List.

Alternative Investment Market

The Alternative Investment Market is the secondary stock market. It is opened to smaller companies in the United Kingdom.

Ordinarily, your public limited company must meet the following criteria in order to be eligible for admission to stock exchange in London.

Firstly, your company must be registered as a public limited company. Secondly, it must intend to place on the market shares which are expected to have a market value of £700,000 or more.

3 years preceding company accounts

Your company must have filed 3 years company accounts previously with Companies House. In addition, your company accounts must be audited. Preferably with unqualified audit report attached.

To put it simply, your company will not be admitted to stock exchange if it has not filed accounts covering three years preceding to your application for listing in the Stock Exchange.

Approved Sponsors

Most importantly, your directors must consider that your company is financially viable. Furthermore, your company must have sufficient working capital.

This admission requirement is satisfied by your Approved Sponsor to the issue. Usually, a merchant bank or stockbroker with overall responsibility for arranging the issue. This includes sending a letter to the United Kingdom Listing Authority stating that your directors have made careful enquiries to satisfy themselves and the Approved Sponsor that the working capital is indeed adequate.

The final principal admission requirement is that your company intend that at least 25% of any class of shares will be in the hands of the public. This is a must and it is spelled out in The Listing Rules.

Prospectus

Thereafter, your company must also satisfy the listing particulars requirements. Subsequently, your company must prepare and publish a prospectus which complies with Chapter 5 and 6 of The Listing Rules.

Correspondingly, you company must publish the following information.

  • Information on the shares which are to be listed.
  • Your share or loan capital.
  • Principal activities.
  • Place of business and employees.
  • Company’s finances. In the form of balance sheet and profit and loss accounts for the last three years. Also, management and on trends in the company’s business.

On the other hand, your company need to include a statement in your prospectus that your company accounts have been audited for the last three financial years. Furthermore, the people responsible for the prospectus need to make a declaration. To the effect that to the best of their knowledge, the information given in that part of the prospectus for which they are responsible is in accordance with the facts and contains no admissions likely to affect the import of the prospect us.

Additionally, you must also disclose if there is changes in your auditors in the previous three years. In this case, the details of audit options, tax clearances, and the terms of the directors’ service contracts.

Above all, your information in the prospectus should not be misleading, false or deceptive. Otherwise, your public limited company will incur both civil and criminal liability under the Financial Services and Markets Act 2000 if evidence supporting materials errors on the prospectus is established. In other words, do not even try to mislead your potential investors and manipulate the information on your prospectus.

Payroll Real Time Information

Payroll Real Time Information (often abbreviated as RTI) reporting with HM Revenue and Customs is compulsory if you are under the Pay As You Earn (PAYE) scheme.

Under the scheme, each time you make a salary payment you must report the income tax and national insurance contribution payable by your staff and your company before or on the day. You do this by submitting FPS form online.

If your company payroll is on monthly basis then you must submit FPS every month. However, if no salary was made in any months, you must submit the form called EPS stating zero payment was made.

Generally, your company is the employer thus has the responsibility to ensure correct income tax and national insurance contribution are deducted correctly from your staff. Subsequently, pay it over to HMRC.

One man company

PAYE payroll for a limited company, where the director is also the owner of the company. As long as your director intend to withdraw money from the company through salary and bonus payments, you must register for PAYE. Correspondingly, you must submit PAYE forms with HM Revenue and Customs. In this case, your director would be considered an employee of the company.

Payroll real time information software

There are many independent payroll software providers you may choose. Usually, purchase of the software comes with technical support. You may call them if you do not know how to use the software for Real time Information reporting.

Free payroll software

Furthermore, there are also free payroll software for small companies with no more than 10 staff. The Gov.UK website give a few recommendations.

Accounting for stock

Accounting for stock involves physical stock counts to its valuation at the financial year end. The closing stock value to be registered in your company accounts would have impact on your corporation tax liability.

If your company is subject to an audit, you auditor will take a good look at your company’s stock valuation policy. Especially if the stock represents significant assets in the company’s accounts and high stock volume is involved.

Normally, your auditor would send their own people to attend stock take at your premises. They would use the stock record you provide them. They would test the effectiveness of your stock accounting system. they would seek understanding how your business is recording, valuing, managing and storing your stock items.

To begin with they would select samples of stock items on your stock record and trace it through to the physical stock item. If they noted any variances in your physical stock to that of your stock record. They would want to know how you deal with damaged stock and missing stock and so on.

Consequently, your auditor would issue either qualified or unqualified audit report. Ideally, you would like to have an unqualified audit report. Because, this means your stock accounting system is good and gives a true and fair view of your company stock’s affairs.

However, if your auditor going to issue a qualified audit report, they would give reasons for their qualified report. You can then work to improve your stock accounting system so that you would not get the same audit report in the subsequent year. It is very important you get your stock accounting system right especially stock is your major asset in your business.

Objectives of stock valuation

The stock value included in your balance sheet represents your company’s current assets, it is often referred to as the stock or closing stock value. Usually, stock can be turned into cash fairly quickly if necessary. Concurrently, this closing stock value included in your balance sheet also also represent the value excluded from your profit and loss account.

There are two objectives you can achieve playing with stock valuation figures. Firstly, you can shift your business profit from one year to another by overvaluing your stock to achieve minimum corporation tax liability. Secondly, you can create fictitious profit by undervaluing your stock.

For this reason, some companies may attempt to overvalue their stock in order to pay minimum corporation tax. On the other hand, others may try to undervalue their stock to improve their financial performance for borrowing or proposing dividends purposes. Dependent on what your business needs at the time. However, this is not allowed by law.

Stock accounting methods

Generally, there are three generally accepted methods of accounting stock.

  1. The First In First Out (FIFO)
  2. The Last In First Out (LIFO)
  3. The Weighted Average Cost valuation

FIFO is widely used by many businesses. The stock valuation using FIFO is stock that is received first is also sold first. LIFO is stock received last is sold first. This is opposite of FIFO. Whereas Weighted Average Cost valuation is taking all the stock costs and divide them by the number of stock to arrive at the average cost of stock per unit.

Generally speaking, choosing an accounting for stock method to used for your business is largely dependent on your business itself. For example, if you are in fresh fruits wholesale, the FIFO method may be suitable and if you are in a vintage wine seller then LIFO is.

Above all, your accounting for stock policy adopted must provide true and fair value of actual physical stock held. In other words, your stock value shall be closest to its net realizable value or cost.

Stock items management

It is ideal to have a system to keep track of your physical stock. You may use a bespoke stock accounting system or manual stock recording system. Organised your physical stock storage for easy access and counting. This would ease your stock replenishment task too.

Occasionally, schedule a physical stock count. This would flag up the variances between your physical stock and stock on your system. You could then update your stock record accordingly.

Also, investigate the stock variances such as what made up the physical and system stock variances. Sometime, the stock could be still in transit, or damaged or stolen. Encourage staff to report damaged stock items and have a record of how the stock was damaged.

On one hand, regular stock count would also help to identify slow moving stock items. What are you going to do with slow moving stock items? You may sell it at discounted price. Or may be you return them to your suppliers if you have that arrangement in place.

Likewise, for high demand stock items, are the stock coming in on time to meet the demand?

Besides, regular stock take would also encourage staff that handling stock to be more efficient in terms of storage and retrieving stock items.

Basically, accurate physical stock would give you accurate stock value to be booked on your balance sheet. At the same time, it would also help you to make an informed decision on stock ordering and management.

Non deductible business expenses

Generally, business expenses incurred necessarily and exclusively for business are allowed for tax purposes. However, there are some non-deductible business expenses when come to calculating your tax liability.

For example, where the expenses incurred relates to both business and private use, the personal use portion is not tax deductible for your company. At the same time, you must add it back to your business accounting profit when calculating your tax liability.

Motor expenses

Likewise, a motor car is used for both business and private purposes. The capital allowances and the total car running expenses will be split in proportion to the business and private mileage. For this purpose, you will need to keep records of your total mileage and the number of miles traveled on your business. In order to calculate the correct amount of motor car expenses for your business.

Entertaining customers are non deductible business expenses

Usually, entertaining expenses are not tax deductible. However, staff entertaining expenses and gifts to employees are deductible but there are restrictions. Seek accountant advice on this.

Bribes, kickbacks. fines, penalties and lobbying costs.

These expenses are self explanatory of why they are not tax deductible.

Start-up costs

On one hand, If you have just started your business, you may be wise to consult a tax accountant advice especially if your start-up costs are rather large.

Working from home

On the other hands, If you are working from home, you will need to keep sufficient records. For example, to back up the proportion of heating and lighting costs that relate to your business and your private use.

Life insurance premiums

A business may buy life insurance coverage on key officers and executives. However, if your business is the beneficiary, the premiums are not deductible. Consequently, the proceeds from a life insurance policy are not taxable income to your business in the event of death. Because the cost of the premiums was not deductible. In short, premiums are not deductible, and proceeds upon death are excluded from income tax.

Travel and convention attendance expenses

Occasionally, some businesses pay for rather lavish conventions for their managers. Sometime, spend rather freely for special meetings at attractive locations that their customers attend for free. The UK tax office takes a dim view of such extravagant expenditures. They may not allow a full deduction for these types of expenses. The HM Revenue and Customs (HMRC) holds that such conventions and meetings could have been just as effective for a much more reasonable cost. In short, a business may not get a full deduction for its travel and convention expenses if the HMRC audits these expenses.

Transactions with related parties

The HMRC takes a special interest in transactions where two parties are related in some way. For example, a business may rent space in a building owned by the same people who have money invested in the business. Thus, the rent may be artificially high or low in an attempt to shift income and expenses between the two tax companies or individuals. In other words, the transactions may not be at arm’s length basis. For this reason, a business that deals with a related party must show that the price paid or received is at current market value.

Lastly, seek advice from tax accountants if you have incurred business expenses that you are not sure whether they can be claimed against your business profit fully or partially.

Voluntary strike off your company

Voluntary strike off your limited company means a director or directors of your limited company could make an application with Companies House to have your company dissolved. In other words, to have it removed from the register.

This process will terminate your company’s existence for good. Thereafter, your company would be available for public or your competitors to register as theirs company names.

To begin with, your company must meet certain criteria before you can apply to strike it off the register.

Firstly, you are obliged to comply section 1004 and 1005 of the Companies Act 2006. To put it another way, your company must not be involved in any litigation that is still on going with the court or under any insolvency arrangement that has not been concluded.

Secondly, you must inform everyone that would be directly affected by the decision to dissolve your company. Everyone in this situation includes your employee, creditor, director, manager, trustee and so on.

In other words, you must make sure that you do not contravene with Section 1006 and 1007 of the Companies Act 2006. Besides, you must serve the notice within 7 days.

Apply for a voluntary strike off your limited company

First of all, you apply using the Form DS01. All your directors must sign and date the form before you submit the form to Companies House.

Once Companies House approve your application, the proposal to strike off your company will be published in the Gazette for two months. During this period, if there is any person or organisation objects to your company being struck off, the process will be on hold. Companies House will get in contact with your directors.

Companies House is likely to put your voluntary striking off process on hold under the following circumstances.

  1. Company’s Value added tax (VAT) still unpaid.
  2. Corporation tax are still outstanding with HM Revenue and Customs.
  3. Creditors are pursuing their debts legally.
  4. Employees were not informed of your intention to strike off your company and you still owed them money.

After your company been dissolved

Subsequently, you do not have to submit your confirmation statement and company account to Companies House.

Late filing penalty

In the event that your company account is overdue. You would be liable to pay the late filing penalty. Usually, companies House would issue late filing penalty after they received your accounts.

This happens frequently to dormant companies. The owners either forgot or think that since their company is dormant therefore nothing to file.

For example, if your company account is already three months late. Instead of filing your dormant account and pay the £750 you can apply to strike off for your company. In this case, Companies House would no longer pursue any late filing penalty.

Want to dissolve your company

If you require help with dissolving your dormant company, our accountants would be able to help you. We will handle the dissolution process from start to finish for you and update you of the progress.

Company registration number

Companies House issue company registration numbers to every limited company incorporated in the United Kingdom. Your company registration numbers are an unique to your company. It is also known as company incorporation number or company number. Your company registration numbers is an official identification number for your company. In other words, it is your company’s ID.

It is also known as company incorporation numbers or company numbers. Your company registration numbers is an official identification number for your company.

Format of company registration numbers

The table below show company registration number format correspond with the company’s country of registration in the United Kingdom at a glance.

Co. with registered office inCo. incorporation numbers format
England and Wales 01234567
Scotland SC123456
Northern Ireland NI123456

First of all, limited company with registered office address in England or Wales shall have 8 digits numbers starting with zero as its company incorporation number. For example, Fine Arts and Pictures Limited has a company registration number 08409295.

Secondly, limited company with registered office address in Scotland has slightly different company registration number format to that of companies registered in England and Wales. The company registration number shall start with SC followed by 6 digits numbers. SC is the abbreviation of Scotland. For instance, Scotland Company shall have company incorporation number read SC123456.

Lastly, limited company with registered office address in Belfast Northern Ireland shall have a company incorporation numbers starting with NI followed by 6 digits numbers. NI is the abbreviation of Northern Ireland. For instance, Northern Ireland Company shall have company incorporation number read NI123456.

Where to find your company registration number

Companies House website

You can search the Companies House register. Just type in your company name in the search box as indicated. Then click the Search button. Your company name and number and other details should display.

Company incorporation certificate

Your company registration numbers is also printed prominently on your certificate of incorporation.

Company change of name certificate

Similarly, If you have recently changed your company names, Companies House would have issued you with your company change of name certificate. You would find your company registration numbers are printed on the certificate. For one thing changing your company names would not affect your original company registration numbers.

All letters from Companies House

In addition, all Companies House letters sent to your company’s registered office address would have your company registration numbers printed on it. Ordinarily, it was used as their reference.

When you correspond with Companies House and HMRC, you must also use your company name and numbers as reference.

The incorporation emails

Usually, your company formation accountants would include your company registration numbers in the incorporation emails. Normally, the emails would include the Memorandum and Articles of Association and your certificate of incorporation. Also, your company authentication code.

When do you require your company registration numbers

Generally, you would require your company registration numbers in the following circumstances.

  • Opening a business bank account.
  • Submit the form 64-8 authorizing your accountants.
  • Submit your CT41G form disclosing your trading status with HMRC.
  • Register for value added tax (VAT) with HMRC.
  • Register for Pay As You Earn (PAYE) with HMRC when you start hiring staff or paying your director.
  • Submit your company confirmation statement with Companies House.
  • Prepare your company accounts. Otherwise, Companies House would reject your accounts if your company number is missing.
  • Complete your corporation tax return.
  • Notify Companies House of changes in your company details. For example, when you file the form AD01 to change your company registered office address you would require your company number.

Basically, any filing with Companies House you would require your company number. Whereas you would require your Unique Tax Reference (UTR) number in addition to your company name and number for filing with HMRC.

Besides, you must also display your company registration number on your business website, company letterhead and other official stationery.

Company director duties

Generally, company director is bound by the terms of the company’s charter set out in the Memorandum and Articles of Associations. In other words, your company director can exercise all the powers permitted by the memorandum and articles which are not reserved to be exercised by the shareholders in general meeting.

Director legal duties

In the event that your director is the majority shareholder and also the sole director, the rule may be despotic. However, your company director must act in accordance with the Companies Act and the general law. Your director’s duties include the following.

  1. A fiduciary duty to your company to act honestly and in good faith in the best interests of your company as a whole.
  2. A duty to exercise such a degree of skill and care in carrying out his duties as might reasonably be expected from someone of his ability and experience.
  3. A duty to fulfill your company’s statutory obligations imposed by the Companies Acts and other legislation at all times.

Director in a position of trust

Concurrently, your director has the duty to act honestly, in good faith and in the best interests of your company which imposes a trustee’s responsibility. This includes to take proper care of your company assets and to ensure payments are properly made and supported by adequate documentation.

In other words, your director must keep property accounting records. For instance, to have a system for cash management for staff and booking of all transactions in the company’s records.

Similarly, not to misappropriate company’s cash for personal use. For example, use your company to fund a luxury lifestyle. Or bought a car solely for personal use but put through the transaction in the company’s books.

Conflict of interests

On the other hand, your director must not make a personal profit at your company’s expense. He/she must disclose to the other directors at the board meetings any interests in your company transactions.

Furthermore, your director must disclose the transactions at the general meetings and include it in the minutes.

Another key point, your director must disclose the transactions in your company accounts. This type of transaction is classified as related party transaction.

Personal benefits

Furthermore, your director’s personal interests must not conflict with those of your company. For instance, they must not use your company assets for personal benefit. This includes knowledge acquired through the company.

Shareholder rights

Shareholder rights of a limited company registered in the United Kingdom is spelled out in the Companies Act 2006.

Minority shareholder rights

Generally, minority shareholders have no say in the management of your company and in the running of your business.

In other words, a minority shareholder cannot do anything if the management of your company is inefficient. It is only the majority shareholders who can take action.

Therefore, your directors must act in good faith and in the interests of your company as a whole at all times.

Majority shareholder

On the other hand, majority shareholders can do anything permitted by the Memorandum and Articles. They can ratify almost any transactions, even retrospectively, in general meeting.

For instance, a sole shareholder can sue your company in his own name to protect his individual rights. For example, to compel board to accept his vote at the general meetings.

As a matter of fact, if there is unfair prejudice, fraud or gross negligence, your shareholder has the rights to call in the Department of Trade and Industry to investigate your company. In some circumstances the court can take actions against your company. However, your shareholder wanting to take action must hold at least 10% of your company shares.

Consequently, your directors may then lose the protection of limited liability. Thus, the court may order directors to compensate your company or your shareholder for loss.

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