Annual/ Regular Compliance - UK Companies

A company set-up anywhere in the world entails maintenance in form of periodic compliance and reporting/ filing with the respective statutory authorities. Similarly, a company limited by shares incorporated in the United Kingdom (UK) has to periodically do necessary compliance and complete filings with the statutory authorities like the Companies House and/ or the His Majesty’s Revenue and Customs (HMRC).

A company limited by shares in the UK needs to comply with following regular/ annual compliance and reporting requirements for its regular maintenance.

1. Registering for Corporation Tax with the HMRC:

• A company must register with the HMRC for corporation tax within 3 months of starting business activities. Starting business activities/ trading includes buying, selling, earning interest, advertising, renting a property and employing someone etc.
• Registration can be done using online services on the HMRC portal or by sending a letter to the HMRC with the required details and information.

2. Confirmation Statement: 

• Every company, including dormant and non-trading companies, must file a Confirmation Statement at least once every year. This is to confirm the basic company information, which includes registered office address, registers, officers (Directors), business activity description (SIC), share capital and shareholders of the Company, are up-to-date on the Companies House portal.
• Filing the Confirmation Statement is mandatory even if there are no changes during the review period.
• The due date for filing the Confirmation Statement is within 14 days from the end of the 12 months (review period). The 12 months review period starts either on:

                -the date of incorporation of the company (for first year);
                -the date of filing last Confirmation Statement

                Example: 
               (i) for first year: 
               Incorporation Date of Company: 1st March 2023
               Review Period: 1st March 2023 to 29th February 2024
               Due date for filing Confirmation Statement: 14th March 2024

               (ii) for second year onwards:
               Date of filing last Confirmation Statement: 14th March 2024
               Review Period: 1st March 2024 to 28th February 2025
               Due date for filing Confirmation Statement: 14th March 2025

3. Annual Accounts and Tax returns:

A company must properly maintain its books of accounts for the transactions done during the financial yearⁱ. After the end of each financial year, a company must prepare:

a. Full statutory annual accounts:

• Statutory Annual Accounts include: (i) Balance Sheet; (ii) Profit & Loss Statement; (iii) Notes to accounts; (iv) Directors Report (except for a micro entityⁱⁱ); and (v) Auditor’s Report (private limited companies are exempted from audit requirements only if Articles of the company provide for such exemption and shareholders do not ask for the audit. Criteria for audit exemptionⁱⁱⁱ)
• If a company is Small, Micro Entity or Dormant^iv, it can prepare and deliver a simpler abridged accounts.
• First accounts usually cover more than 12 months, as they start from the date of incorporation of company and end on the ‘accounting reference date’ that Companies House sets for company’s financial year - which is the last day of the month (of subsequent year) in which company was set up.

b. Company Tax Return (CT600):

• The accounting period covered by tax return cannot be longer than 12 months (like period for first accounts for the Companies House). So, a company may have to file 2 tax returns to cover its period of first accounts i.e., first tax return for a period of 12 months starting from the date of incorporation and second tax return for the remaining period of overall first accounting period.

Due dates for Annual Accounts and Company Tax Return:

One can file Companies accounts and Corporate Tax Return together or separately as per their respective due dates.

4. Event based reporting requirements:

Under the Companies Act, 2006, a company must inform the Companies House of other corporate changes, including but not limited to:

a. Change in the company’s registered office: 

• In case of change in the Company’s registered office, the change needs to be intimated to the Companies House and the same shall be approved by the Companies House. Once the change is approved by the Companies House, they shall intimate the same to HMRC.
• Company’s new registered office address must be in part of the UK as that in which the Company is originally incorporated/registered. 
• The Company must inform the Companies House within a period of 14 days from the date of change of such registered office address or change in address where the records are kept.

b. Change in the company’s officers or in their personal details: 

• Any change in the Company’s officers i.e., Director or the Companay Secretary, if any or change in their personal details such as address etc shall be reported to the Companies House within a period of 14 days of such change.

c.    Change in Share structure (new shares, cancellation of shares, etc.):

• Changes in share structure needs to be reported to the Companies House within 21 days of change.

d. Change in the registered Email Id of the company:

• The registered email id of the Company can be updated through the filing of Confirmation Statement or through the update Email Address option, and should be reported within 14 days of change.

e. Change in the significant beneficial ownership:

• Any change in the significant beneficial ownership or any personal details of such person shall be reported to the Companies House within 14 days of such change.

f. Change of Company name: 

• Any change in the name of the Company shall be reported to the Companies House within 21 days from the change. The name can be changed either by way of Special Resolution or by permission given in the Articles of Association of the company.

g. Change in the constitution/objects of the Company:

• Any change in the objects of the Company or articles of association, constitution (on account any changes in enactment or ordered by courts or regulating authority) shall be reported to the Companies House within a period of 15 days in respective form with the necessary documents.

Apart from the above changes, companies must inform the Companies House of all other changes usually within 21 days of such changes. Further, certain changes like the following and any other as may be prescribed by the law needs approval of the shareholders by way of an ordinary resolution or a special resolution or an extraordinary resolution (95% - only in a few cases). Usually, the company’s Articles prescribe the type of resolution required for a certain change, if not then as per the provisions of the Companies Act, 2006 (any changes made therein from time to time).

a. Change in the Company name
b. Removal of the Director
c. Change the company’s constitution and Articles of Association
d. Change in company’s share structure

Company must file special or extraordinary resolutions with the Companies House within 15 days of passing them.

Conclusion:
Compliance and reporting/ filing are necessary to keep the stakeholders of a company updated about the company’s details and activities. Any non-compliance like delay or missing the reporting or compliance shall result in levy of penalty by the Companies House/ HMRC or concerned statutory authorities on the company and/ or on the Officers (responsible persons) for the same, and in some cases may also result in closure of the company.

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Reference notes:

ⁱFinancial Year:

Financial year in the UK is from 6th April to 5th April of the subsequent year. However, every company can have different financial year, where first financial year usually starts from the date of incorporation spanning a 12 months period, or in case where the company chooses a different financial year (example: 1st April to 31st March of subsequent year) then the first financial year for such company shall start from the date of its incorporation till subsequent 31st March. After the first year, the financial year shall start from the immediate next date of the first financial year end date and spanning for a 12 months period.

ⁱⁱMico Entity:
Company will be considered as a Micro Entity if it has any 2 of the following:

• a turnover of less £ 632,000 or less
• £ 316,000 or less on its balance sheet
• 10 employees or less

ⁱⁱⁱCriteria for audit exemption & for Small Company:
Company may qualify for audit exemption if it has any 2 of the following:

• a turnover of not more than £ 10.2 million
• assets worth not more than £ 5.1 million
• 50 employees or less on average

^ivDormant Company: 
Company is considered as dormant by Companies House if it has had no significant transactions (filing fees paid to Companies House, penalties for late filings, money paid for shares upon company incorporation are not included in significant transactions) in the financial year.

Further, company is considered as dormant for Corporation Tax if it:

• has stopped trading and has no other income, for example investments;
• is a new limited company that hasn’t started trading/ business

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