Post Registration Compliances in the UK- An Overview Once a company is registered in the UK, it is required, as per the Companies Act of 2006 and the Customs and Inland Revenue Tax Act, to hold every year an annual general meeting of the members, file a Confirmation Statement every year, update the books of accounts of the company every year, get the financial statements audited (unless an exemption exists) and file the tax returns. This piece of writing takes you through the major post-registration compliances to be followed by the private companies limited by shares in the UK as per the Companies Act and the estimated costs of such compliances. Major Post-Registration Compliances in the UK Following arethe major post-registration compliances that the private companies limited by shares in the UK need to submit with the government agencies after their successful registration: Appointment of a Company Secretary In order to give a fillip to ease of doing business, the law does not make it mandatory for companies to appoint a company secretary for all the companies in the UK. However, some companies do appoint Company secretaries and entrust them with the director’s responsibilities. While appointing a company secretary as a director of a company in the UK, the companies must keep in mind that such a company secretary: Cannot be appointed as an auditor of the company Should not be an ‘undischarged bankrupt’- unless permission has been sought from the court. The restrictions imposed by law on a bankrupt person end on the day when such a person becomes free from his debts (known as ‘discharged’). In order to check whether a person has been undischarged, the Insolvency Register can be checked. Registered Office It is obligatory for every UK limited company to provide its registered office address. This is the address where the company shall receive letters and necessary papers. The Companies House do not permit having a P.O. Box number/ address as the registered office address for the companies. The address of the company should also be in the country where the company is being registered. This means that a company getting itself registered in England and Northern Islands should have a registered office address in England and Northern Islands, respectively. Additionally, there is a statutory requirement for all companies to display the company’s registered office address in all correspondence with the clients on behalf of the company. This includes the letters and invoices sent to the clients. The name of the company should be displayed outside the address of the building or at the entrance of the building where many offices are located in the same building. Further, there is another requirement mentioned in the Companies Act 2006 of displaying the registered office address on the company’s website. Directors of the company The Companies Act also make it mandatory for every company to appoint at least one individual as the director of the company whose age should be above 16 years. The directors of the company are legally responsible for running the affairs of the company and ensuring that the company’s accounts and reports are properly prepared. There is no such mandate by the law that the companies need to have UK resident directors only. The directors of a UK based company can live anywhere in the world, and there is no such obligation on them to live in the UK at the time of their appointment or after their appointment as the director of the company. The names and personal information of the directors are publicly available at the Companies House. Moreover, the service address they provide (or their correspondence address) is also made publicly available. Event-Driven Reporting Requirements Every company is obligated to inform/notify the Companies House in case any changes take place in the company in the following instances: Changes in the officers of the company and also changes in their particulars; Changes in the registered office address of the company; When allotment of shares takes place; If any change is made in the accounting period end; Changes in the name of the company; Changes in the constitution of the company; and Registration of a charge (which can be made by any party having ‘interest’ in the charge and not just the company) In addition, to the abovementioned requirements, the companies are also required to maintain the books of accounts and other prescribed registers at their registered office address or any other nominated address of the company. Confirmation statement: It is also incumbent on every company in the UK to file a ‘Confirmation Statement’ (previously known as Annual Returns) with the Companies House on an annual basis. The following information about a company is reported in a Confirmation Statement: Principal Business Activity undertaken by the company; Registered office address of the company; Address where the list of the company’s shareholders is kept; Type of company, i.e. limited by guarantee or limited by shares; Address and Name of the company secretary (if appointed); Name and Address of all the Directors of the company; The number of shares issued by the company and their value; including the ownership; and The details of debentures (if issued) There are no late filing penalties that can be imposed on the companies on late filing of the Confirmation Statement. However, if a company fails to miss the deadline for submission or does not file the Confirmation Statement properly, the Companies House has the power to initiate prosecution proceedings and/or strike off proceedings against the company along with its directors. Appointment of an Auditor for the company Every private company in the UK has to appoint an auditor for every financial year of the company unless the directors have passed a resolution that they do not require audited accounts. It is the directors’ responsibility to appoint the first auditor of the company. Such auditor holds the position of the auditor until the first meeting of the shareholders, where the accounts of the company are laid before the members of the company. At this meeting, the members of the company have the option to reappoint the same auditor of the company or appoint another auditor who shall hold the office of the auditor of the company until the next shareholder’s meeting, where the accounts will be laid before the members of the company. The Private companies have been provided with an option to pass an ‘elective resolution’ where they can do away with the obligation of laying the accounts before the members in a general meeting. If this resolution is passed, then the auditor has to be reappointed, or a different auditor is appointed at another general meeting of the company’s members, which must be held within a period of 28 days of the accounts being transferred to the members. The auditor of the company has been entrusted with the responsibility of making a report to the members of the company on the accounts of the company. The auditor has to report whether in its opinion, the annual accounts of the company provide a true and fair view of the profit and loss account and balance sheet of the company and also indicate whether the accounts have been prepared in accordance with the relevant financial framework such as adherence with the international accounting standards and the requirements of the Companies Act. Business Licenses A business license is a permit that is issued by the government or a local governing authority, such as a municipality or a professional body delineating the processes to be followed by a business entity while conducting its business operations in the UK. The need for a business license and the appropriate business license is required for your company is entirely dependent on where the company is carrying out its commercial activities and the kind of industry it is operating in. the most common sectors that are heavily regulated and require companies to obtain business permits are the sectors of alcohol, gambling and tobacco. For example, a business permit for opening a pub selling alcoholic drinks, betting, casino etc. Preparation of Financial Statements of the company Every private company in the UK has to prepare the following financial accounts at the end of the company’s financial year. These accounts are also called statutory accounts, which are prepared from the company’s financial records every year. Following are the statutory accounts that should be prepared by every company: ‘balance sheet’ is the financial record that reflects the value of everything that a company owns on the last day of the company’s financial year ‘Profit and Loss account’ (P&L account) is the necessary paper which shows the running costs, sales and profit and loss made by the company over the financial year end Director’s report (unless the UK company has been classified as a ‘micro entity’) Notes about the accounts The company is also required to send copies of all the above-mentioned statutory accounts to: all the shareholders of the company Companies House People who can attend the company’s general meetings HMRC There are different deadlines for sending annual returns to the Companies House and tax returns to the HMRC. However, you can deliver both returns at the same time. If your company falls in the category of a small, dormant or micro entity, you can prepare and deliver simpler (‘abridged’) accounts. Workplace pension dutiesof the company Every private company in the UK that employs at least one person as staff becomes an employer and needs to fulfil certain legal duties. According to the Pensions Act of 2008, every employer company has to put certain staff into the workplace pension scheme and make the required contributions to it. If your company has employed or going to employ at least one person between the age of 22 years up to the state pension age and who earns more than £192 a week or £833 a month or £10,000 a year, then your UK company is considered to be an employer having an employee in the eyes of the law and obligated to contribute into a pension scheme. The automatic enrolment of your company begins from the time when you employ the first member of your staff. Payment of Corporate Income Tax or Corporate Tax (CT) The private companies are also obligated to file their annual Corporate Income Tax returns reporting the corporation tax (CT) to be submitted to the HM Revenue and Customs (HHRC). The companies are bound to file their annual CT returns even if they do not have any tax to pay unless the said company has been advised by the HHRC that the company is dormant for tax purposes. The following details are supposed to be submitted in the CT Returns: Gains made on the sale of assets in excess of the purchase price; The capital allowances claimed for the business assets purchased; The Director’s loans that are repaid at the end of the company’s financial year; Details of the Director’s loans that are unpaid at the end of the financial year; The losses that have been carried forward from the previous accounting period; and The Reliefs to be claimed. The deadline for the payment of the corporation tax is nine months and 1 day after the end of the chargeable accounting period. However, the deadline for the filing of CT Return is twelve months after the end of the company’s accounting year/period. Following are the penalties that are payable for late filing of the CT returns: Time After the Deadline Penalty 1 day £ 100 3 months Additional £ 100 6 months 10% of the unpaid tax added to the unpaid tax estimated by the HHRC 12 months An additional 10% of the unpaid tax added to the unpaid tax estimated by the HHRC If a company has been found to file late returns 3 times in a row, then £ 100 penalties can be increased to £ 500. Value Added Tax (VAT) filings VAT registration VAT is the indirect tax charged on most of the goods and services sold and purchased in the UK and in Europe. The threshold for obtaining compulsory VAT registration in the UK is £ 85,000. It is calculated on a 12 month rolling period. If your company believes that your income projections after the sale of goods and services are going to breach the threshold of £ 85,000 within a 12 month period, then you must register for VAT. Companies also have the option to voluntarily register for VAT. Payment of VAT and filings The general practice of filing VAT returns and payment of VAT in the UK is done on a quarterly basis. However, businesses have the option to request and file their returns on a yearly basis or even monthly basis. The deadline for VAT registration is 1 month and 7 days calculated from the end of the VAT period. Pay As You Earn (PAYE) The system Pay As You Earn (PAYE) is a tax collection system where the Government gets tax revenue from employed workers as soon as they start earning. It is the responsibility of your company as an employer to run this system wherein you deduct the income tax and National Insurance Contributions from the wages of your employee and pay the amount to HMRC every month. Your company is also responsible for paying additional National Insurance Contributions as an employer. These contributions are called Employer’s Class 1 National Insurance Contributions. You have another responsibility of sending returns to HMRC showing the Income Tax and National Insurance due and paid.
The major post registration compliances that every private limited company in the UK is supposed to fulfil, include the appointment of first directors, company secretary and auditor of the company; finalising the registered office address; preparation of financial statements; confirmation statement; obtaining business permits; event-based reporting; workplace pension contributions and Corporate tax and VAT filings among others.
The Companies Act of 2006 does not make it mandatory for companies to mandatorily appoint a company secretary. Some companies do appoint Company secretaries and entrust them with the responsibilities of a director. However, a company cannot appoint a company secretary as the auditor of the company. Another thing a company must ensure is that the company secretary should not be an undischarged bankrupt.
No, there is no such mandate by the law to appoint local directors as the directors of the company. The directors of UK based company companies can be non-UK residents and live anywhere in the world both during the registration period and after the registration of the company. They are also not required to be present in the UK at the time of their appointment as the directors of their respective companies.
The law does not prescribe any penalty for late filing of the Annual Returns or the Confirmation statement of the company. However, if the deadlines are missed, the Companies House can initiate the proceedings to strike off the company and/or initiate prosecution proceedings against the directors of the company and also against the company if the Confirmation statement is not filed properly.
The law makes it compulsory for every private company in the UK to appoint an auditor to get their accounts audited for each financial year of the company. However, if the directors of the company have resolved otherwise on the grounds that audited accounts are not required by the company, then they can choose not to appoint one.
If the returns are paid one day after the deadline but before 3 months, then the penalty is £100. If the returns are paid after 3 months from the deadline but before 6 months, then the penalty is an additional £100. If the returns are paid after 6 months but before 12 months from the deadline, then the penalty is 10% of the unpaid tax added to the unpaid tax estimated by the HHRC. If the returns are not paid after 12 months from the deadline, then the penalty will be an additional 10% of the unpaid tax added to the unpaid tax estimated by the HHRC.
The threshold for obtaining compulsory VAT registration in the UK is £ 85,000. If your company believes that your income projections after the sale of goods and services is going to breach the threshold of £ 85,000 within a 12 month period, then you should register for VAT. Companies have the option to voluntarily register for VAT.
The deadline for the payment of the corporation tax is nine months and 1 day after the end of the chargeable accounting period. However, the deadline for the filing of CT Return is twelve months after the end of the company’s accounting year/period.
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