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Setting up a Company - HMRC Admin Basics

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Now that you have either decided to run your business via a company or have just set up your company, you should have an understanding of what HMRC will expect from you. Naturally HMRC want to ensure that you are reporting and paying any tax due on time. Companies pay corporation tax at 20% on all sources of income.

Be clear on when your new company starts to trade.  This is important because your first accounting period starts on the commencement of trade and cannot be more than 12 months long.  Your first corporation tax return may well be made up of two accounting periods.

Trading starts when your company acquires a source of income and not when you open a bank account.

Reporting & Payment

HMRC will usually send you a notice to deliver a corporation tax return (Form CT603) shorty after the end of the accounting period.  If this is not the case you should tell HMRC within 12 months of the end of the period.

You will also need to tell HMRC when your company becomes active (i.e. is trading) and therefore chargeable to corporation tax within 3 months of starting to trade (Form CT41G).

The company tax return (Form CT600) is due 12 month after the end of the accounting period or 3 months after the issue of a notice if this is later. Finally all reporting can be done on-line.

Payment must be made electronically. Small companies (turnover up to £1.5m) pay 9 months and 1 day following the end of the accounting period.  Large companies (turnover above £1.5m) pay by quarterly instalments.

Useful link: https://www.gov.uk/limited-company-formation/set-up-your-company-for-corporation-tax

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