Corporation Tax

the_engineer_5

I registered my limited company in September this year (2008). My question is; even though my business has not completed a full tax year cycle do I still have to pay my corporation tax by 1st Jan 2009?

mtfree

Corporation Tax is due 9 months and a day after your financial year end. So if your year end is 31/09/09 the tax is not due until 01/07/2010.

olly300

Nope.

I suggest you get an accountant.

You have some choice in your first year of when your company year ends. So you can set your company year to end in April or you can let it end in September 2010.

Then you have to pay your tax within 9 months and one day after your accounting period. Your tax return needs to be submitted within 12 months of your accounting period.

mtfree

Although you can choose your year end you can go no longer than 18 months in total. Therefore if it was registered in September 2008 you can go through until February 2010 however the accounts will need to be filed no more than 22 months from the date of incorporation and therefore this wont give you much time after the year end to get the accounts prepared.

I also suggest your better with an accountant for a limited company as accounts need to be prepared in line with specific requirements for filing at companies house.

the_engineer_5

....or you can let it end in September 2010.

2010? that would be 2 years from registration. I dont mean to question you but only to confirm.

mtfree

18 months is the maximum period for a company.

And you need to complete a change of year end form and register it at companies house

the_engineer_5

Thank you guys for the info. I take on board the suggestions regarding taking on an accountant. However I am a one man band so to speak who is in full-time employment and only work on my own busness at weekends, evenings etc and don't expect to turn-over much more than a 2-3k a year and only if and when opportunities arise. I only set up a ltd company to keep myself tax legal. With this modest income I suggest that I may be paying out a conciderable percentage of my small turnover to an accountant. You may think this is a little short sighted of me (I hope not) but I hoped with a little guidance from you guys I can make it work. Thanks again for your replys.

The Engineer

mtfree

Good luck with your venture. Like i said its the format of the abbreviated accounts that may be a struggle. It can be done online at Companies House and some work now looking into it might be worth the effort. HMRC will only accept period of a maximum 12 months therefore if you extend your year end that means 2 tax periods for the one set of accounts. For ease leave the year end 30/09 (inform HMRC that this is your year end date) and your tax will be payable 01/07/2010.

With regards an accountant your probally right - a good accountant would charge £600 - £700 plus VAT for the accounts work and tax work like you say a large proportion.

Not sure the limited company was necessary and you could have kept tax legal by informing HMRC that you were to start an self-emplyment.

the_engineer_5

mtfree

I had considered self employment but the worry of 'hoping' that I would be IR35 complient in its interpritation was to much to contemplate. This way though more convoluting I can pay myself a dividend at a much reduced rate of tax at the end of the year (not bothering with a salary will also mean no D0 tax code and no NIC, as I understand it).

mtfree

As i understand it being a limited company does not solve the IR35 debate. You can still have an IR35 limited company where the income is reated as payable under PAYE. Have to admit dont have a lot of experience of these but have come across them so it might not have solved your concerns. Paying dividends are deemed tax paid as long as you dont go into higher rate tax bracket.

the_engineer_5

I'm in the HTB in my present employment so looks like I'm 'stumpped' either way. Tax man wins again by the looks of it. Ho Hum:(

Thanks again for your comments.