Corporation tax is the most crucial aspect of a limited company since filing it with HMRC is unavoidable. Similarly, filing tax returns is also a mandatory requirement for a limited company to fulfill its corporation tax obligations correctly. Company tax returns are a necessary and formal report submitted to the HMRC, outlining all the company’s income, expenses, and tax obligations for its financial year.
To learn more about corporation tax and its filing with HMRC, read our respective guides :
What is corporation tax and how it work for limited companies?
How to file corporation tax for limited companies?
Also, company tax returns have strict deadlines to meet, which will lead you to face penalties from HMRC. Therefore, this blog will cover all the important details and key factors you must remember while filing your company tax returns.
What are company tax returns?
After your limited company becomes active for corporation tax, you must prepare and file corporation tax returns (also known as CT600) and full statutory accounts with HMRC each year.
It is an essential document you submit to HMRC to report your company’s income, expenses, and the amount of tax you need to pay.
On the contrary, if your company’s status is dormant or inactive for Corporation Tax purposes, no tax return filings are required.
Furthermore, CT600 includes your company details, like
- CRN and UTR number;
- How much income and expenses your company incurred during the accounting period;
- Adjustments for the claimed allowances and reliefs;
- The calculated amount of the corporation tax you will pay.
Whether you want to establish a new business, set up a franchise, or expand your existing business, get in touch with our accounting firm professionals to help! Register today in under three minutes – For Free!
How to file company tax returns?
Now, let’s discuss how to file company tax returns since it is also a significant step to understand how to file corporation tax for limited companies.
You can simply file your company’s tax returns by using accounting software. Alternatively, you can do so via HMRC’s online Corporation Tax service.
If you are using HMRC’s online tax service, you will first sign in to your HMRC account and upload the annual accounts corresponding to the accounting period in the tax return.
Next, you will mention the corporation tax amount due. Further, you will also have to include the supporting documents that will display how you calculated the amount in the tax return from the figures in the accounts.
Likewise, you must also include the completed form CT600.
It is significant to mention that the director of a limited company usually files the company tax returns with the HMRC. However, if you have hired or appointed a skilled accountant, they can also do that on your behalf.
Whatever the case is, your company tax returns must include a declaration that all information provided is accurate, complete, and updated. Last but not least, you must inform HMRC about the appointment of the accountant who will manage your tax affairs.
What is the deadline to file a company tax return?
The deadline for submitting your tax returns is 12 months after the end of each accounting period. Also, you must provide full annual accounts with your tax returns.
What are the penalties for late filing of tax returns?
HMRC will impose a flat-rate penalty of £100 if you fail to deliver a tax return and full accounts by the filing deadline. Furthermore, if the return is more than 3 months late, you will have to face an additional penalty of £100.
Moreover, if you file your company tax returns 6 months after your deadline, HMRC will estimate your corporation tax bill and charge a penalty of 10% of the unpaid tax.
Lastly, another 10% of any unpaid tax penalty will be charged if the return is 12 months late.
As a result, it is wise not to miss the tax return deadlines when filing corporation tax for limited companies.
Do dormant companies need to file tax returns?
It is worth highlighting that if a limited company does not conduct any business activities, it will be considered a dormant or inactive company. In such cases, the director must inform HMRC about the company’s dormant status.
Accordingly, dormant limited companies are inactive for corporation tax. For instance, they have no corporation tax obligation, given they have been inactive since their incorporation (registration) date or for the whole duration of their most recent accounting period.
However, as soon as a dormant company starts conducting any sort of business activity or begins receiving or spending any money, its dormant status ceases. Consequently, it will now be classed as an active trading company.
Conclusion:
Summing up, a proper, accurate, and timely filing of tax returns is crucial to ensure compliance and avoid unnecessary financial penalties from HMRC.
However, the filing process can become a bit of a head-scratcher if your focus is rather directed on ensuring your limited company runs seamlessly.
In this connection, it is prudent to let a skilled accountant manage your tax affairs on your behalf. Fortunately, the accountants listed on Accountingfirms have the expertise and knowledge to ensure that your returns are filed correctly and efficiently.
Hence, with their assistance, you can remain worry-free and have peace of mind that your corporation tax obligations will be taken care of by the professionals.
Disclaimer: The information provided on AccountingFirms.co.uk is for informational purposes only and should not be considered as financial advice. Always consult with a professional accountant to ensure compliance with UK laws and regulations.