Deadline fast approaching… key dates for the limited company contractor
23rd Mar 2022
Despite the recent legislative changes in the Finance Act 2020 which saw a lot of contractors move away from operating through their own limited companies to umbrella companies there are still a large number of independent workers in the UK that are providing consultative services and therefore still operating as limited company contractors.
Contractors who work through their own limited company are required to carry out several legal and financial obligations per their firm’s articles of association, the requirements of UK company law and other legislation imposed by the state. Failure to do so can result in serious sanctions.
Here we look at some of the mandatory obligations and dates that are important to remember for the limited company:
Filing of annual accounts– The annual accounts for a limited company include the profit and loss statement, balance sheet, notes about the accounts, a director’s report, an auditor’s report and the appropriate signatures. The financial year-end is automatically created for the limited company when it is incorporated. This is the last day of the month that the company was registered. Filing for the annual accounts is usually nine months after the end of the accounting period, except for the first year although the financial year-end date can be changed after incorporation.
Filing the company tax return - A company tax return must be completed and submitted to HMRC together with a financial report and calculation to declare how much tax is due to be paid by your company. Even if the company has made a loss, or there is no corporation tax to pay, this still needs to filed. The company tax return is due 12 months after the end of the accounting period.
Filing a confirmation statement - A confirmation statement needs to be sent to companies house every year which confirms that the information they hold about the company is up-to-date. The confirmation statement needs to include details of the registered office, names and addresses of directors, a statement of capital and shareholder information, the company’s standard industrial classification code (SIC code), which is used to define the company’s economic activity and a register of ‘people with significant control’. This must be delivered no later than 14 days after the end of the company's 12-month review period. The review period starts either on the date the company was incorporated or the statement date stated on the last confirmation statement.
VAT Registration – A limited company will need to register for VAT if the company’s annual turnover is in excess of £85,000 in any twelve months. (Amounts correct March 2022). Limited companies can opt to register voluntarily if their taxable turnover is below this. A VAT-registered business must report to HMRC the amount of VAT they have charged and the amount of VAT that they have paid. This is done through a VAT Return which is usually due every 3 months. If the company has charged more VAT than paid, the difference needs to be paid to HMRC. Conversely, if the company has paid more VAT than been charged, the difference can be reclaimed from HMRC.
PAYE Registration – A company must register for PAYE if the company has employees, including Directors who receive a salary through payroll. PAYE is the system to collect income tax and national insurance from employment. The information and payments are now collected in real time and must be submitted to HMRC every time the employees are paid.
Self-Assessment Registration - Directors and shareholders should also register for self-assessment and prepare tax returns for any untaxed personal income they receive for example from investments, dividends, or commissions. Usually, there is no need to register their only income is from wages and pension. For the financial year end April 5th all online tax returns must be submitted and paid by the following January 31st.
There may be other dates to consider depending on the number of employees a limited company has at any one time so it’s always good to refer to an accountant for advice on these matters.
Planning is key when adhering to these deadlines and whilst ample time is given for filing obligations it is imperative that these deadlines are diarised and not forgotten. It is also possible to sign up for reminders from Companies House as well as the HMRC gateway.
Should you have any queries on setting up as a limited company contractor don’t hesitate to get in touch with our operations team at accounts@wilkinsonandassociates.co.uk as we are always happy to assist with the onboarding process.