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Limited Company Factsheet
Company Stationery Requirements
Corporation Tax Self-Assessment
There are certain differences between operating as a sole trader and a limited company director. Directors cannot take money from the company bank account without knowing how they are going to show it in the accounts. While the shareholders are the owners of the company, the directors are responsible for running it within the boundaries of the law. For limited companies there are different laws, commencing and ceasing trading is more complex, especially as there are more accounting issues to allow for.
Directors are responsible for complying with health and safety laws, tax laws and employment. They are liable for penalties if information is filed late. They are liable for the companies debts and any improper action can mean penalties, disqualifications or even a criminal conviction. They are jointly and severally liable with the company for group tax debts that are not remitted. Directors and officers of limited companies have certain personal liabilities with the fiduciary duties of their position.
Appointment , resignation and change of details have to be sent to Companies House using forms AP01, TM01 and CH01. Any conflict of interests must be reported and the shareholders approve all new directors at a general meeting. A private limited companies must have one director or more and a public limited company must have at least two. The director must be at least 16, not disqualified by a court and not be an undischarged bankrupt.
Directors can be disqualified for the following reasons:
1) trading while bankrupt;
2) not keeping proper accounting records;
3) failing to prepare and file accounts;
4) not sending annual returns to Companies House;
5) failing to send tax returns and pay tax to HMRC;
Directors duties include:
1) directors have duties to the company and not to individual shareholders, employees or creditors unless there is exceptional circumstances.
2) directors have to remain loyal to the company, and avoid conflicts of interest
3) directors are expected to respect long term consequences, employers, suppliers, customers, community and environment.
4) directors are expected to act in good faith and promote the success of the corporation
5) Keeping accurate records, producing/filing accounts and annual returns with Companies House.
6) Producing and filing accounts with HMRC and remit all tax owed.
7) Payment of employees and deal with their tax and national insurance and remit all tax owed to HMRC.
It is no longer legally required for limited companies to have a company secretary. The main responsibilities of a company secretary are ensuring documentation is completed and sent to Companies House and signing company accounts (directors legal responsibility). The function of the company secretary varies from company to company and depending upon their employment contract.
The company secretary typical responsibilities are for the registered office appearing on all company stationery, arranging company meetings and taking notes/minutes for the company record.
Company Stationery Requirements
On all stationery, websites and emails the company should display the limited company name, registered office address, registration number, VAT number if applicable and where incorporated. If you wish to display a directors name you should state them all. You should display the company name at your place of business and registered office.
Sometimes it maybe more tax efficient to to use the limited company trading structure with investment property business. To determine this it is necessary to take into account all your circumstances.
High rate taxpayers have tax rates at 40% and 50% and the small company tax rate is only 20% rising to 28%. There have been promises in the last budget to reduce this even further in future years. Also, individuals pay either 18% or 28% capital gains tax for property sales. Reinvesting money in property through the company can be beneficial and accelerates investment size. But, any long term plan should take into account how the investments are going to be withdrawn from the company which is going to be the most beneficial.
Timing of extraction of funds via the dividend route so as to avoid the personal high rate tax band is crucial. This is usually the most tax efficient way as this incurs no national insurance. There could be significant stamp duty payments if the investment properties change ownership by transfer of shares.
Using the limited company structure not only has tax saving benefits but can, also limit personal liability, such as if a tenant sues in case of an accident. Under the sole trader route the personal liability can sometimes be unlimited, but choosing the limited company route does depend on circumstances and future business planning.
Corporation Tax Self-Assessment
The company has 12 months from it’s year end to file a self assessment (CT600), accounts and tax computations to HMRC. However, all tax must be paid within 9 months and 1 day from the company year end date. Late penalties are incurred for late filing. Three months late or less is £100, over 3 months is £200, 6 to 12 months is 10% of unpaid tax and more than 12 months late incurs 20% unpaid tax.
Amendments to the return can be submitted up to 12 months from the return filing date. HMRC can investigate companies randomly or for reason within 12 months from the filing, or 12 months from the date of the amendment. But, HMRC has the power to investigate companies, in case of neglect or fraud for up to 20 years. All records should be kept for 6 years from the company year end date, or companies can be fined up to £3000.