Tax deadlines and penalties for limited companies
Essential tax compliance and need-to-know tax deadlines for limited companies
Setting up and operating through a limited company is often a natural step for a new or growing business. Limited companies have their own filing requirements, and it’s important to be aware of the tax deadlines and annual obligations to ensure potential penalties for non-compliance are avoided.
Remaining compliant demands a proactive and informed approach to keep your company in good standing
NEW COMPANY SET UP
Once established, the date for filing the first set of accounts will depend on when the company was incorporated – but this will be 21 months from the date of incorporation. It’s important to note, this may not match a normal month end date, and can often be missed.
The tax return is due for filing 12 months after the end of the first accounting period, and will run from the date the company starts to trade (not the incorporation date).
If the accounting period goes over 12 months, which can be the case with a new company, two returns are required for the period over the first 12 months.
Tax is normally payable nine months and one day after the end of the accounting period, but if there’s a long period, two payments will be due.
For example; if the accounting period runs from 1 January 2023 to 31 March 2024, the tax is payable pro rata on 1 October 2024 and 1 January 2025, however there’s one filing date for the two company tax returns of 31 March 2025.
Annual obligations FOR LIMITED COMPANIES
Annual accounts submission
After the initial submission, your limited companies are required to file annual accounts within nine months following the end of its financial year. These accounts must provide a transparent overview of the company’s financial performance and position, such as the profit and loss statement, balance sheet, director’s report and, depending on the company’s size, an auditor’s report.
This documentation ensures stakeholders, including shareholders, creditors and regulatory bodies, have access to accurate information about the company’s financial health.
Corporation tax obligations
Parallel to filing annual accounts is the obligation to address Corporation Tax.
Limited companies must calculate and pay Corporation Tax nine months and one day after the conclusion of their financial year. This includes informing HMRC if you believe the company is not liable for any Corporation Tax, thus avoiding penalties for presumed non-payment.
There are, however, different rules for Large Companies. A Large Company is a company with taxable profits in excess of £1,500,000. If there are also associated companies, the limit is reduced – so it’s important to check! If this is the case, payments are accelerated, making it important to seek advice and support as soon as possible if the profits are high or increasing.
Company tax return
A critical component of tax compliance is filing your company tax return with HMRC. This is due 12 months after the end of the accounting period for corporation tax.
This return is comprehensive, detailing the company’s tax liability based on its annual financial report and calculations. It’s a fundamental process for declaring tax obligations to HMRC and requires you to be thorough and precise.
P11D & P11D(b)
P11D & P11D(b) forms must be filed by 6 July, following the end of the tax year.
You’re required to complete a P11D for each employee and/or Director who has received taxable benefits or expenses from the employer. This can include:
• Company cars and fuel provided for personal use
• Private medical insurance
• Overdrawn loan accounts
If the benefits and/or expenses have been provided and taxed through the payroll, a P11D is not required. However the National Insurance due in respect of any payrolled benefits and expenses need to be reported on P11D(b) form.
Both the P11D and the P11D(b) must be reported to HMRC, and any late returns incur an automatic penalty of £100. Each employee must also be provided with a copy of their P11D.
Understanding penalties for non-compliance
Penalties for late filing
The consequences of missing a filing deadline are tiered based on the delay.
For Corporation Tax, the following applies:
- 1 day late: £100
- 3 months: Another £100
- 6 months: HMRC will estimate your Corporation Tax bill and add a penalty of 10% the unpaid tax
- 12 months: Another 10% of any unpaid tax
For statutory accounts with Companies House, the following applies:
- Not more than 1 month: £150 for a private company or LLP (£750 for a public company)
- More than 1 month but less than 3 months: £375 for a private company or LLP (£1,500 for a public company)
- More than 3 months but less than 6 months: £750 for a private company or LLP (£3,000 for a public company)
- More than 6 months: £1,500 for a private company or LLP (£7,500 for a public company)
Penalties for late payment
Late payments of taxes incur interest charges at a rate of currently 7.75%. This applies to various taxes, including Corporation Tax and Income Tax, and underscores HMRC’s stringent approach to tax collection.
Continually failing to make tax payments can lead to severe consequences, which may include intervention by debt collection agencies through to potential liquidation of the company.
Confirmation Statements
Importantly, all companies – including dormant and non-trading entities – are required to submit a Confirmation Statement annually. This ensures the accuracy of the information HMRC have on record for your business.
You must also declare all planned future activities of the company are lawful. This is known as a Lawful Purpose Statement.
Learn more about Confirmation Statements here >
Strategies to avoid penalties
Avoiding penalties and ensuring compliance is not just about adhering to deadlines; it involves strategic planning and best practices, including the following.
Accurate record-keeping
Maintaining detailed and accurate financial records is more than a procedural task – it’s the backbone of fiscal responsibility and regulatory compliance for any entity.
This record-keeping ensures that financial statements and tax returns are prepared with precision, minimising the risk of inaccuracies that could potentially result in penalties or an audit.
It can also offer you invaluable insights into your financial health, enabling informed decision-making. This proactive approach can safeguard you against non-compliance while facilitating strategic financial planning and management.
ACCOUNTS AND OUTSOURCING SERVICE
Proactive financial planning
Setting aside funds for tax liabilities as they accrue throughout the financial year is a prudent financial strategy that ensures you’re prepared when tax obligations become due.
This approach avoids the last-minute rush to gather sufficient funds for tax payments, thereby reducing your stress and the risk of incurring penalties for late payments.
By allocating funds in advance, you can also improve your cashflow management, allowing for a more stable financial outlook.
Addressing penalties
When companies face penalties for late tax filings or payments, the option to appeal provides a recourse if they can present a valid reason for the delay – such as severe illness or unexpected technical disruptions.
The appeal process, however, is stringent and demands comprehensive documentation as evidence to support the claim of a reasonable excuse.
Successful appeals hinge on the ability to demonstrate that the company took all reasonable steps to meet its tax obligations, despite the challenges faced.
Staying compliant with diligence
Compliance for limited companies is marked by a series of statutory obligations and tax deadlines, designed to ensure transparency and accountability.
Understanding and adhering to these obligations is not merely a legal requirement, but a testament to the company’s commitment to financial integrity and stability.
At TC Group we provide financial solutions to over 35,000 clients, so we understand the commercial risks and challenges you face on a daily basis.
Ensuring your limited company remains compliant is our bread and butter. But what makes TC Group different is we have multitude of functional accountancy and specialist business growth services, along with personal financial solutions and legal advice, providing our clients with a unified “one-stop-shop” approach.
We can support you in finding innovative and stable solutions, enabling you to achieve your goals, safeguard your wealth and leverage tax saving initiatives.
Speak to us today with a free, no-obligation initial consultation.