Registering with the Tax Authorities
This post is just one part of a 12-part guide to setting up a new business. Download the full business set-up guide to discover everything you need to know about satisfying HMRC and steering clear of any unwanted penalties and fines.
A significant task for the new business owner is ensuring that the business is properly complying with the extensive tax and information filing requirements imposed by the various authorities. Problems and penalties could arise if the new business is not registered with the appropriate tax authorities in a timely fashion. While this chapter is not intended to be an all-inclusive list of filing requirements, it summarises some of the more prominent requirements common to most businesses.
HMRC is moving towards electronic forms and notifications via the internet. Paper forms are still required in some instances. In the following section we provide links to both downloadable versions of forms and the web links to apply online for various services.
H M Revenue & Customs
You must give HM Revenue and Customs (HMRC) specific information about your company within 3 months of starting up in business. You may get a penalty if you don’t.
You can do this online once you’ve got your company’s Unique Taxpayer Reference (UTR): https://www.gov.uk/limited-company-formation/set-up-your-company-for-corporation-tax
HMRC will use this information to work out when your company must pay Corporation Tax.
You can also register online with HMRC to notify self-employment using form CWF1: https://www.gov.uk/government/publications/self-assessment-and-national-insurance-contributions-register-if-youre-a-self-employed-sole-trader-cwf1
You need to register by 5 October following the end of the tax year you need to send a tax return for. If you’re late, you won’t get a penalty as long as you pay your Self-Assessment bill in full by the deadline.
H M Revenue & Customs – NI Contributions Office
Depending on the level of profit, sole traders and partners have a liability to Class 2 NIC at a weekly level of £2.85 (where annual earnings are £6,025 or more for 2017/18). These contributions are collected with income tax and Class 4 national insurance for 2017/18. From 2018/19 Class 2 contributions will be abolished, with the self-employed just paying Class 4 contributions thereafter. There was a proposal to increase the Class 4 rate in the Spring 2017 Budget but this has been shelved (for the time being?).
H M Revenue & Customs – VAT
You need to consider if it is beneficial to be VAT registered from the outset. The pros and cons are discussed in Chapter 4. If you are registering for VAT, form VAT 1 needs completing, and if you are a partnership, form VAT 2 needs to be completed giving details of all the partners.
Information about VAT 1 and VAT 2 (and other VAT forms) can be found at: https://www.gov.uk/government/collections/vat-forms
To register online go to https://online.hmrc.gov.uk/registration/
All businesses with turnover above £100,000 now have to file VAT returns online via the internet, as do all new VAT registrations irrespective of turnover.
There are many ways we can help you:
- We can assist you in registering for VAT online
- We can act as your agent and file VAT returns online with you providing us with the figures to be entered
- We can help you implement online filing through software
- We can provide you with accounting software with integrated online filing so you can easily calculate and file the figures
More information can be found at the HMRC website: https://www.gov.uk/vat-returns
Please contact us at 0121 314 2020 if you need any help.
When do I need to submit digital accounts information to HMRC for my business?
The Government proposes to require businesses to submit accounts information to HMRC quarterly as part of the “Making Tax Digital” project. This was originally scheduled to start for some businesses in 2018. However, on 13 July 2017 it was announced that Making Tax Digital for Business would be delayed to 2020 at the earliest but would be introduced for VAT quarterly reporting from April 2019. This means that all VAT registered business above the VAT registration threshold will need to keep their accounting records in a digital format that links to the HMRC computer system. The legislation to introduce Making Tax Digital (MTD) is included in the second 2017 Finance Bill. Many of the detailed rules will be set out in regulations in secondary legislation.
It was also announced that quarterly updating would not be mandatory for those businesses below the VAT registration threshold (currently £85,000).
The following summarises some of the more significant filing dates for a corporation using a calendar year end. Many of these requirements also apply to partnerships and sole traders. Naturally, if a year-end other than 31 December is used, some of these dates will vary.
|Final RTI Submission due
|Submission of form P11D reporting benefits in kind
|Payment of Class 1A NIC
|Payment of corporation tax for accounts prepared for the calendar year (9 months after the end of the accounting period)
|Year-end tax planning
|Submission of corporation tax return for accounts prepared for the calendar year (12 months after the end of the accounting period)
|Forms CT61 to be submitted
– tax deducted/received on interest payments
|VAT returns (although these can be monthly or annually)
|Payment of payroll taxes (under certain circumstances – quarterly)