Financial year end reporting is a legal requirement for limited companies. If you run a limited company, then at the end of your financial year you must send certain information to HMRC and Companies House. Financial year-end reporting is a legal requirement, both to ensure that the company pays the right amount of tax, and to provide the public, banks, shareholders, and potential investors with accurate information about the company.

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Prepare annual accounts for a private limited company:

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Your company’s annual accounts - called ‘statutory accounts’ - are prepared from the company’s financial records at the end of your company’s financial year.

 

Financial year-end reporting involves sending key information about your accounting period to HMRC and Companies House. You must send your Company Tax Return to HMRC, and you must send your Statutory Accounts to Companies House. Sometimes you can make both these submissions together.

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Every limited company has its own financial year. This year starts on the company’s ‘birthday’ (i.e. the date you started trading, specified when you registered with Companies House), so the year-end falls on the day before that date in the following calendar year. It shouldn’t be confused with the tax year, which runs from 6 April to 5 April.

Your financial year is usually the same as your accounting period for corporation tax. This is the period on which you need to report.

 

If your company is small, a micro entity or dormant, you might be able to send simpler (‘abridged’) accounts.

 

Producing your statutory accounts is also an invaluable way for you as business owner to understand your day-to-day operational costs and all the other key aspects of your business's finances.

If this is your company’s first accounting period it may be a little longer than 12 months. In this case you’ll need to submit an additional tax return to cover the extra time.

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What happens if I miss the year-end reporting deadline?

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If you miss the deadline for submitting your statutory accounts (which is different to your Company Tax Return deadline – see below), then Companies House will impose a penalty of: 

£150 if you are up to 1 month late.

£375 if you are between 1 to 3 months late.

£750 if you are between 3 to 6 months late.

£1,500 if you are over 6 months late.

These penalties are doubled if you are late to file 2 or more years in a row.

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There are some key things to remember to avoid a penalty:

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Your accounts will not be accepted until they meet the requirements of the Companies Act and they could be returned for you to correct. To avoid a fine for submitting the corrected accounts it’s best to submit as early as possible.

If there is a special reason why the accounts might be filed after their due date, you can apply for more time before the deadline passes.

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If you miss the submission deadlines of your Company Tax Return, you could be liable to pay penalties, starting from £100. You can find the full details of the penalties on the government website.

There are no penalties for filing your confirmation statement or annual return, but the registrar could take steps to strike off your company.

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Company Tax Return:

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Your Company Tax Return (form CT600) is the document you send to HMRC. It contains details of your turnover, expenses, tax allowances and profit, in the form of the company’s Statutory Accounts. HMRC uses this information to calculate how much you owe in corporation tax (your accountant may have already estimated this amount).

Statutory accounts are a summary, so describe overall outgoings and income rather than individual transactions.

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Statutory accounts must include:

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Income Statement: Your profit or loss for the accounting period

Statement of Financial Position: The overall value of your company. Otherwise known as the balance sheet, this reports your business's assets and liabilities - and the total different between them - at the end of the accounting period.

Director’s report (not required for micro-entities): A report on the state of the company by the board of directors

Footnotes: Additional information to clarify the other sections

 

The Statement of Financial Position and the Footnotes will be published by Companies House for general viewing.

You might have to include an auditor’s report - this depends on the size of your company

The balance sheet must have the name of a director printed on it and must be signed by a director.

 

What’s the deadline for financial reporting?

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As you are submitting different documents to two different authorities, there are several deadlines to keep track of.

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Send your first accounts to Companies House-21 months after your company’s registration date

File subsequent annual accounts with Companies House-9 months after the end of your company’s financial year

Pay corporation tax to HMRC (or tell them that the company doesn’t owe any)-9 months and 1 day after the end of your accounting period

File your Company Tax Return with HMRC-12 months after the end of your accounting period

 

You’ll notice that the deadline for paying corporation tax is shorter than the one for filing your Company Tax Return – so your company might pay tax before submitting its tax return. This may seem strange, but we will be able to estimate how much tax is due, and any overpayments can be sorted out later. Nevertheless, it is good practice to submit your tax return in good time and not wait for the deadline, to ensure you pay the right amount of tax.

 

You must always send copies of the statutory accounts to:

 

• All shareholders

• People who can go to the company’s general meetings.

• Companies House

• HM Revenue and Customs (HMRC) as part of your Company Tax Return.

 

What accounting records do I need for my year-end accounts?

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Income and expenditure records:

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This should include receipts for all sales and purchases, cheque books, and up-to-date bank statements.

In addition, list your outstanding debtors at year-end. To do that, list all sales that haven’t been paid for and if you’re pretty certain invoices won’t be paid, mark them as a potential bad debt. Explain why to your accountant who may then write it off as a ‘bad’ or ‘doubtful’ debt. This means it could count as an allowable business expense.

Finally, list all your creditors in date order, with the oldest first. This will help you decide which creditors are more important and when to pay them.

 

Unsold stock and uncompleted work at year-end (‘floating’ assets)

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If you are a service business, you may have work in progress that can’t be counted as a fixed asset.

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However, if you deal in physical goods, you’ll have to do a physical stocktake, which everyone dreads, but must do, at least once a year. Plan for it in a less busy period when no new stock comes in. To speed things up, first pre-sort the same type of stock together, so it is easier to count. For uniformity and speed, make sure you have standard stocktaking procedures in writing.

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After the stocktake, work out total value of your stock. Old, or damaged goods should have a depreciation value recorded. To work that out, check them against the original prices you paid.

To calculate the value of unfinished projects, use time records to work out how far along you are in percentage terms. So, if a project is 50% complete, assign 50% of the value of the project in your accounts as incompletes work.

 

A register of fixed assets

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Fixed assets are physical or concrete assets your business owns, like IT equipment, premises, and vehicles.

To ensure that records of your fixed assets are up to date, draw up a list. This should include descriptions and locations of items; dates they were bought, together with prices and a record of assets disposed of or sold in the previous year. Make sure to keep receipts and invoices in a safe place.

In addition, use an online calculator to estimate how much your fixed assets have depreciated in value over the past year, and reduce the value to your business.

 

A record of company liabilities

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Make sure that records of any debts or investments you have, are up-to-date and accurate.

Any debts or investments that extend past the current year-end are called long-term liabilities. They can be finance-related or operational.

Financing liabilities are debt obligations produced when a business raises cash and include convertible bonds, bonds payable and notes payable.

Operating liabilities are obligations a business incurs during its normal business operations. They include capital lease obligations and post-retirement benefit obligations to employees.

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Staff payroll information

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HMRC pays particular attention to payroll and expenses matters. So, ask your accountant to check that all calculations for PAYE and NI are correct. If they’re not, your business is liable – not the employee.

When it comes to expenses, use standard expenses claim form and insist that employees attach all receipts.