July 28, 2018 0

Year End Accounts | Accounting Services

Year End Accounts  | Accounting Services

 At the end of every business year, all UK-based companies, even non-trading and dormant, are supposed to prepare and file their year end accounts (statutory accounts) with the Companies House and the corporation tax return with the Her Majesty’s Revenue and Customs (HMRC). For business owners, it is important to understand when the year end accounts are due, as a late submission would result in penalties and fine, and in some cases, the company director and secretary could even face legal prosecution.

 

What is year end?

‘Year end’ refers to the end of a company’s financial period, and it is a reminder for limited companies to file their accounts for the last fiscal year with the Companies House and HMRC. The deadlines for these submissions are dependent on the accounting reference date, i.e. the day on which a company’s financial period ends. Though businesses have the option of picking an accounting reference date of their choice, when companies are first registered, the date is, by default, set as the first anniversary of the last day of the month in which the company was incorporated, unless changed otherwise. In most cases, companies align their accounting reference date, which usually spans a period of 12 months, with the financial year, beginning and ending in the month of April.

 

What to file at the year end?

Irrespective of the accounting reference date followed, companies are required to file the following two sets of documents:

  • Corporation Tax Return: This has to be submitted to the HMRC, and it entails the CT600 form with complete details of the overall profits made by a business during the tax accounting period. These profit figures are then used by the HMRC to decide how much corporation tax the company owes.
  • Statutory Accounts: This has to be submitted to the Companies House, and it includes the Statement of Financial Position and Footnotes. The first assesses a company’s business value on the basis of capital, assets, reserves and liabilities, whereas the latter comprises complete details about the credit, advances and guarantees offered to directors, along with financial commitments, contingencies and guarantees. Both these documents are made public by the Companies House on its website.

 

When are the accounts due?  

The rules that apply for companies filing their accounts for the first time are different from rules that would be applicable for succeeding submissions. The rules are mentioned below:

If the accounts are being filed for the first time and cover more than 12 months:

  • Private companies: Accounts should be filed within 21 months of the incorporation date, or three months from the accounting reference date, whichever is longer.
  • Public companies: Accounts should be filed within 18 months of the incorporation date, or three months from the accounting reference date, whichever is longer.

If the accounts are being filed for the first time and cover a period of 12 months or less:

  • Private companies: Accounts should be filed within nine months of the accounting reference date.
  • Public companies: Accounts should be filed within six months of the accounting reference date.

For subsequent submissions, private companies should file their accounts nine months within the accounting reference date, whereas public companies should file them within 6 months of the accounting reference date.

 

What happens if deadlines are missed?

If companies happen to miss the deadline for filing their accounts, penalties are imposed by the HMRC and the Companies House to encourage on-time filing. The penalty increases with time; therefore, if a company continuously misses the deadline, it will have to pay more penalty/fine.

Penalties for late corporation tax return filing

  • £100 if the filing deadline is missed
  • £100 extra if accounts haven’t been filed even after three months
  • £100 increases to £500 if a company files its accounts late three years in a row

Penalties for late statutory accounts filing

  • £150 for a one month late submission
  • £375 for submissions that are late for up to three months
  • £750 for submissions that are late for up to six months
  • £1,500 for submissions that are over six months late
  • The penalties double if a company files its accounts late two years in a row

 

What else should be checked?

 

VAT Returns: If a business is VAT registered, its VAT return would most likely be due around the same time as the year end. Though VAT returns are not included in the year end accounts, they coincide nonetheless.

Confirmation Statements: Directors of limited companies have to confirm their company information with the Companies House, once every year. Confirmation statements should be filed 14 days within the deadline, which is normally one year after the company was incorporated, or the date the last Annual Return/Confirmation Statement was filed.

 

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