It is important that anyone responsible for the accounts and tax filing regime for private limited companies is aware of their obligations.
After the end of its financial year, a private limited company must prepare full annual accounts and a company tax return. The deadline for filing the first set of accounts with Companies House is 21 months after the date the company was registered with Companies House. Further annual accounts must be submitted 9 months after the company’s financial year ends.
There is a fixed date for the payment of Corporation Tax which is 9 months and 1 day after the end of the relevant accounting period. Note that a company is usually required to pay the tax due in advance of the filing deadline for a company tax return.
In most cases, a company’s tax return must be submitted within 12 months from the end of its accounting period. Online Corporation Tax filing is compulsory for company tax returns. Company tax returns have to be filed using the iXBRL data standard using either HMRC’s own software or third-party commercial software.
The accounting period for Corporation Tax is normally the same 12 months as the company financial year covered by the annual accounts. Note that there are penalties for filing late with Companies House and HMRC.
1 February 2022 – Due date for Corporation Tax payable for the year ended 30 April 2021.
19 February 2022 – PAYE and NIC deductions due for the month ended 5 February 2022 (If you pay your tax electronically the due date is 22 February 2022).
19 February 2022 – The filing deadline for the CIS300 monthly return for the month ended 5 February 2022.
19 February 2022 – CIS tax deducted for the month ended 5 February 2022 is payable by today.
1 March 2022 – Due date for Corporation Tax due for the year ended 31 May 2021.
2 March 2022 – Self-Assessment tax for 2020-21 paid after this date will incur a 5% surcharge unless liabilities are cleared by 1 April 2022, or an agreement has been reached with HMRC under their time to pay facility by the same date.
19 March 2022 – PAYE and NIC deductions due for month ended 5 March 2022 (If you pay your tax electronically the due date is 22 March 2022).
19 March 2022 – Filing deadline for the CIS300 monthly return for the month ended 5 March 2022.
19 March 2022 – CIS tax deducted for the month ended 5 March 2022 is payable by today.
HMRC has issued an interesting press release stating that ‘Fact: HMRC does not do ‘sweetheart deals’. HMRC makes sure every taxpayer, no matter what their size, pays everything they owe.’
This denial could be in response to many claims that have been made over the years in Parliament and the press suggesting that HMRC offers better settlement terms when dealing with certain taxpayers (usually the largest UK businesses and multinationals). HMRC refutes these claims saying they seek to collect the right amount of tax due under UK law and that they make sure every taxpayer, no matter what their size, pays everything they owe.
The press release also states that at any given time HMRC has around half of the UK’s 2,000 largest businesses under investigation. This compares with around one in ten small businesses. This rate of investigation is because the largest companies often pose the biggest tax risks.
HMRC has also said that robust measures were put in place to control error and fraud in the key coronavirus support schemes and that HMRC’s customer service has not been impacted by staff working from home during the pandemic.
The rules for the Corporation Tax treatment of carried forward losses changed from 1 April 2017. The changes increased flexibility to set off carried forward losses against total profits of the same company or another company in a group whilst at the same time introducing new restrictions as to the number of profits against which carried forward losses can be set.
However, there is a specific restriction in respect of company reconstructions that disallows carried forward losses to a successor company. Broadly speaking, the losses disallowed equate to the amount of the debts the predecessor company is unable to pay.
The restriction is calculated as follows:
1. add up the liabilities, except share capital and reserves, kept by the predecessor, 2. deduct the value of the assets kept by the predecessor, 3. deduct the sale consideration given for the transfer.
If the result is a positive-sum, that is the amount of the relevant liabilities restriction. Losses up to and including that amount are then disallowed (any losses in excess of that sum being allowed). If the result is a negative-sum, there is no disallowance.
Just before the Christmas break, the Chancellor announced a new support package for some businesses most affected by the Omicron variant.
The biggest single measure was the re-introduction of one-off grants of up to £6,000 for businesses in the hospitality and leisure sectors many of whom have seen their seasonal trade hugely impacted by this latest COVID-19 variant. It is thought that some 200,000 businesses will be eligible for these new grants. On 7 January 2022, the government delivered funding to councils across England to provide these one-off grants.
This means that firms in the hospitality, leisure and accommodation sectors, many of whom have seen a decline in footfall and increased cancellations due to the Omicron variant, will be able to apply for one-off grants of up to £6,000 per premise depending on the rateable value:
– businesses with a rateable value of £51,000 or above: £6,000 – businesses with a rateable value between £15,000 and £51,000: £4,000 – businesses with a rateable value of £15,000 or below: £2,667
The government will also provide for a £102 million top-up for discretionary funding to help local authorities support other businesses outside the hospitality and leisure sectors.
The devolved administrations in Scotland, Wales and Northern Ireland will receive an additional £150m through the Barnett formula to help offer similar measures. This will be allocated with around £80 million going to the Scottish Government, £50 million to the Welsh Government and £25 million to the Northern Ireland Executive.
In tandem with the announcement that no late filing penalties will be issued for 2020-21 Self-Assessment returns submitted by 28 February 2022, HMRC has also confirmed a delay in implementing late payment penalties. This means that taxpayers will not be charged a 5% late payment penalty if they pay their tax or set up a payment plan by midnight on 1 April 2022.
Under the normal rules, a 5% late payment penalty would have been charged if tax remained outstanding or a payment plan has not been set up before 3 March 2022. This extension gives taxpayers an extra 4 weeks to sort out their affairs before the 5% late payment penalty is levied.
It is important to note that it is only the 5% penalty that is being waived. Interest will still be applied to any balance that was outstanding from 1 February 2022. The current rate of interest is 2.75%. The only way to stop further interest amassing is to pay any tax due in full.
Further, late payment penalties will apply, with no extensions, if the tax remains outstanding (and no payment plan has been set up) for more than 6 months after the 31 January filing deadline. From 1 August 2022, you will be charged a penalty of the greater of £300 or 5% of the tax due. If your return remains outstanding one year after the filing deadline, then further penalties will be charged from 1 February 2023.
There are special procedures for importing goods into the UK. Following the end of the Brexit transition period on 31 December 2020, the process for importing goods from the EU effectively mirrors the process for all other international destinations.
A number of easements to help ensure a smooth transition for goods coming from the EU after Brexit ended on 31 December 2021. This means that since 1 January 2022, businesses are no longer able to delay making import customs declarations under the Staged Customs Controls rules that applied during 2021.
The changes that came into force on 1 January 2022 include:
A requirement for full customs import declarations for all goods at the time businesses or their courier/freight forwarder bring them into Great Britain, except if they are non-controlled goods imported from Ireland to Great Britain
customs controls at all ports and other border locations
requirement for a suppliers’ declaration proving the origin of goods (either UK or EU) if they are using the zero tariffs agreed in the UK’s trade deal with the EU
commodity codes, which are used to classify goods for customs declarations, are changing
There are different rules in place for the movement of goods into, out of or through Northern Ireland.
Affected businesses should ensure that they consider as a matter of urgency how they are going to submit customs declarations and pay any duties that are due. Businesses can appoint an intermediary, such as a customs agent, to deal with their declarations or can submit them directly although this can be complex for businesses unused to the process.
There is a ‘Simplified Declarations’ authorisation from HMRC that allows some goods to be released directly to a specified customs procedure without having to provide a full customs declaration at the point of release. However, this needs specific authorisation from HMRC and there are also other requirements that must be met.
HMRC has announced that late filing penalties will be waived for taxpayers that file their 2020-21 Self-Assessment returns by 28 February 2022. The due date of 31 January 2022 remains and HMRC is still encouraging taxpayers to try and meet this deadline. Taxpayers should try and pay their tax bill by 31 January 2022 as interest will accrue from 1 February 2022 on any outstanding liabilities.
There had been concerns from Self-Assessment taxpayers and their agents for the government to soften its stance on late filing penalties in view of the continuing pandemic. The confirmation that no late filing penalty will be issued, given one month’s grace, has been broadly welcomed.
HMRC expects more than 12.2 million people to complete a Self-Assessment tax return for 2020-21 and almost 6.5 million returns have already been submitted.
HMRC’s Deputy Chief Executive and Second Permanent Secretary said: ‘We know the pressures individuals and businesses are again facing this year, due to the impacts of COVID-19. Our decision to waive penalties for one month for Self-Assessment taxpayers will give them extra time to meet their obligations without worrying about receiving a penalty.’
There are also a number of options for taxpayers to defer payments due on 31 January 2022 and pay by instalments over 12 months. This includes using the self-serve Time to Pay facility online for debts up to £30,000 or by making an arrangement with HMRC.
A new government press release has been issued reminding the public that online sales scams continue to be a major issue. In fact, 2021 saw a record number of cyber-attacks and online scams.
Action Fraud, the national reporting centre for fraud and cyber-crime, has revealed that almost 100,000 people in the UK have fallen victim to online shopping fraud in the past 13 months. This has seen over £60 million being reported lost.
The National Cyber Security Centre (NCSC) is encouraging people to shop online securely by following five actionable steps:
1. Keeping accounts secure – strong and separate passwords should be used for the most important online accounts, including email, banking or payment accounts (such as PayPal). The NCSC recommends using three random words to create a password. Turning on two-step verification can add an extra layer of protection. 2. Be aware of emails, text messages or websites that look too good to be true or suspicious – many scammers set up fake messages designed to steal financial and personal information. Members of the public can report suspicious messages to the NCSC via text to 7726 and email to firstname.lastname@example.org. 3. Choose online retailers carefully – research stores before buying to confirm they are legitimate – check via trustworthy consumer websites. Certain emails or texts regarding “too good to be true” offers may contain links to fake websites. If unsure, don’t use the link. 4. Use a credit card for online payments if possible – most major credit card providers protect online purchases and are obliged to refund individuals in certain circumstances. 5. Only provide enough details to complete a purchase – only fill in the mandatory details on a website when shopping online (often marked with an asterisk).
The Coronavirus Statutory Sick Pay Rebate Scheme for small and medium-sized businesses and employers enables them to reclaim Statutory Sick Pay (SSP) paid for sickness absence due to COVID-19. The online service closed for new claims after 30 September 2021.
However, following the new Omicron wave, the online claims service is to be reintroduced from mid-January. The government announced before the Christmas break that firms will be re-eligible for the scheme from 21 December 2021 and will be able to make claims retrospectively once the claims service is relaunched.
The scheme covers up to 2 weeks’ SSP per eligible employee who has been off work because of COVID-19. Employers are eligible for the scheme if their business is UK based, small or medium-sized and employs fewer than 250 employees. Under the scheme, the Government will cover the cost of SSP for Covid-related absences qualifying employers across the UK.
Employers should maintain records of staff absences and payments of SSP, but employees will not need to provide a GP fit note. If evidence is required by an employer, those with symptoms of coronavirus can get an isolation note from NHS 111 online or a ‘shielding note’ / letter from their doctor or health authority advising them to shield because they’re at high risk of severe illness from coronavirus.