Company Responsibilities

The varying responsibilities of the company will fall at a number of different times in the company's life, and throughout its financial year. Upon incorporation there are a number of considerations that need to be taken into account in order to ensure that all legal requirements are met. After company registration, the company must consider whether they need to register as an employer, register for VAT, and must inform HMRC of their tax liability.

In the longer term, the company must consider their annual filing obligations with Companies House. The main concerns for the company here are the Annual Return and he Annual Accounts, which need to be filed after a financial year. In addition, a Corporation Tax return will be required to be submitted to HMRC as well as paying any tax that may be due.

PAYE stands for Pay As You Earn, and is the system by which the UK government take tax and National Insurance Contribution (NIC) payments from the salaries of workers. Any company that is employing and paying a salary is legally required to register as an employer, in order for these payments to be made. The employers use the system to calculate, deduct and make the correct payments to HMRC - dependent on the salaries being paid.

There are certain salary thresholds that if a company exceeds requires them register as an employer with HMRC. These thresholds change on an annual basis, therefore it is important to take note to ensure that your company is registered if salaries paid exceed this level.

VAT stands for Value Added Tax, and is the tax that is levied on goods and services by the UK government. The tax can apply to goods and services which are produced within the United Kingdom, or imported into the country. The rules are, however, often complicated.

A limited company is only legally obliged to register for VAT when their taxable turnover for the past 12 months exceeds the level of £73,000; or alternatively they are expecting to reach this level of revenue within the next 30 days alone. A company can voluntarily register for VAT if it is below these levels, for example to take advantage of image benefits of registration, or to allow them to reclaim VAT from their start-up costs.

Soon after company registration, the Registered Office will receive a letter from HMRC (Her Majesty's Revenue and Customs), with a form that needs to be filled-in. The form is titled the "New Companies Form", and is named CT41G. This form simply informs HMRC of the company's liability for Corporation Tax, and needs to be completed within three months of company formation.

The form is a relatively simple document that requires your to fill in some basic information about your newly set up company. As well as basic information from company incorporation (e.g. registered address, company registration number etc), the form also asks you to detail trading activity and dates.

The annual return is one of the yearly filings that must be made with Companies House in order to meet the statutory requirements of a limited company, ensuring that the company remains on the register. The annual return is filed to update Companies House with information about your company: registered address, directors and shareholders (and their addresses and details) etc.

Annual accounts will include the balance sheet and the profit & loss account, and paint the financial picture of the limtied company for the previous financial year. Together, the accounts show income, expenditure, assets and liabilities to give an indication of the financial health of the company. This is usually accompanied with a directors' report which is a document that explains the numerical figures of the accounts, and what they show. This is designed to help shareholders make informed decisions with regards to investment and performance of the company.

If a company has not been actively trading for the year, i.e. the company lay dormant, they are still required to file both an annual return and the annual accounts. However, the company is able to file an abbreviated form of the accounts known as dormant company accounts. They are simply required to indicate the company's dormancy on the annual return.

After informing HMRC of your tax liability following company formation, you are not required to pay corporation tax for a distance into the future. However, it is important to note that the company still be liable to pay tax on their earnings in this period of time, although payment isn't due. Therefore, a company needs to be aware of their tax liability so that they can afford to pay the tax bill, when their Corporation Tax return and payment become due.