Companies house filing accountants guide

Annual accounts

A company is expected to file its Confirmation Statement and annual accounts every year.

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In 2016, the regulations changed such that you now have to submit the Annual Return rather than the Confirmation Statement though the difference in the two is not that great.

The annual accounts include a Balance Sheet, Profit & Loss account, Directors’ Report and some explanatory notes. These have to be finalized and receive directors’ approval and then filed at Companies House nine months before the end of the financial year. You will also have to submit the corporation tax return alongside the annual accounts to the HMRC.

Small companies (usually anything with sales less than £10.2 million, although other criteria may also apply) can file abridged accounts. These are often easier to make, though directors will still have to get shareholder approval every year if they intend to file such accounts.

Whether they file abridged or full accounts, small companies can decide not to file the Profit & Loss Account or the Directors’ Report at Companies House.

Probably something that could be more relevant to many companies – Micro-Companies (any businesses with sales less than 632 thousand pounds though other criteria may apply) can prepare and file simpler accounts that meet the minimum legal requirements.

We recommend that any company with revenues less than 600 thousand pounds prepare Micro accounts as these are cheaper and simpler to prepare.

There are no fees for account filing and for the most part, small companies will file the minimum information required by the authorities.

However late filing fees are charged at 150 pounds if you are late for less than a month and £375 if you are late for anything less than three months. You will have to pay up to £1500 in fines for later payments that may even double if you are late for two consecutive years.

Learn more about micro-entities, small companies, and late filing fines from the Companies House Website.

 

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Confirmation Statement

Since 2016 the Confirmation Statement (CS01) replaced the old Annual Return. Data that needs to be submitted with the statement include:

• Directors’ names

• Registered office

• People that has Significant Control

The most significant change that came with the changes in 2016 is that businesses now have to keep a record of Persons that have Significant Control. In most private companies, such people would be the largest shareholders but, in the instance, where the constitution of the business vests trustee shareholders or non-shareholders significant influence over the decision making of the company, such people need to be listed on the PSC register. They also have to be recorded when the company files the Confirmation Statement.

A person that has significant control is an individual that:

• Indirectly or directly has more than 25 percent of all shareholding;

• Indirectly or directly has the prerogative to get rid of or hire a majority of directors;

• Indirectly or directly has more than 25 percent of the voting rights;

• Exercises or has the prerogative to exercise considerable control or influence over the company;

• Exercises or has the prerogative to exercise significant control or influence over the activities of an organization or trust that is not a legal person. The members or trustees of the organization or trust would also need to qualify under any of the conditions set out above.

The confirmation statement has to be prepared on the same date every year, typically close to the date of the formation of the company and does not have to necessarily have anything to do with the company’s financial year-end.

While a company will not be penalized or fined for filing their statement a little late, Companies House may threaten to levy charges of up to £5000 or threaten to wind up the company of the company in presenting the Confirmation Statement.

You will typically pay £13 for the online filing of the Confirmation Statement and £40 for paper submissions.

 

Ad hoc filing of Companies House forms

The confirmation Statement and the Annual Accounts are the two documents that need to be filed yearly.

Nonetheless, when there are critical changes to a company, there will be other documents that will have to be filed too. For instance, documents have to be filed where there is a charge on company assets, when the company borrows money and when directors resign or are appointed. Even changing the name of the company will require the filing of new documents.

As such, it is critical to be up to date with all important filings.

 

How Filing is Done

When you need to file, you can go to the Companies House website which has a list of forms to be filed online and the paper versions. You can usually fill in the PDF versions, print them and post them to Companies House.

Nonetheless, Companies House encourages companies to make their filings online given the different fees it charges for the paper and online filings. In this regard, it has launched the Protected Online Filing service to encourage online filing.

 

Protected Online Filing (PROOF Service)

Companies House provides the service to reduce fraud and to make it easier for companies to file online. Signing up to PROOF means that you have to submit some of your forms online, which works to prevent the submission of fraudulent papers.

This is alright though in some instances, particularly where there must be evidence that the person signed a form, a physical form that has to be completed and submitted in the post may be more appropriate.

 

Online filing

According to regulations filing a form online requires an Authentication Code and Security Code that can be obtained from Companies House. With these codes, one can then get into the online filing system of Companies House and then file their documents. Fee payments can be done either by credit card or if that is not preferable, one can open an account with Companies House and then use direct debut to settle any fees every month.

 

Filing of Annual accounts

If your accounts have not been audited you are allowed to log into the Companies House website and file your annual accounts.

However, it will typically be much simpler to get an accountant to file it for you. We have accounts preparation software that makes for a clean and quick process of filing once we receive the physically signed copy. Our process is error-free and will make your filings more efficient.

Accountants guide for Vat Margin Scheme

VAT Margin schemes are calculated by taxing the difference between the purchase price of an item and the price at which you later sell it for. Note that it is never charged on the full selling price. For instance a VAT 16% will be charged on the difference between the two prices.

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You can decide on a margin scheme if you are selling:

• Collector’s items
• Second hand goods
• Antiques
• Works of art

You cannot use a margin scheme if you are selling:

• Precious stones
• Investment gold
• Precious metals

You can shift to a margin scheme at any time as long as you are keeping accurate records that are then reported on the VAT return. There is no need to register for the scheme and you will not be required to inform the tax authorities unless requested to do so.

Standard VAT and Margin Schemes

If some of the items you deal in do not qualify for a margin scheme, you will be required to charge and pay VAT for those items in the standard way.

The following cannot be included in any margin scheme calculations:

• Accessories or parts
• Repairs
• Business expenses
• Business overheads

Instead you can claim these on the standard VAT returns

How to Calculate the Margin

Using the margin scheme, you are only required to declare VAT if you sell goods for a profit. You do not have to account for VAT if you make losses.

To calculate VAT on each sale follow the following example:

Term	Description
(a) Purchase price	£15000
(b) Selling price	£20000
(c) Gross Margin (b – a)	£5000
(d) VAT payable (c x 1/6)	£833.33

The vat fraction makes it possible to know the exact amount of VAT payable for any positive margins.

A standard rate of 20% VAT is 1/6. Once you have calculated the gross margin, it is then a matter of multiplying the answer by 1 and dividing it by 6.

Guidance for Stock Books

Stock Books need to be updated and should have all the pertinent information as set out in the table below. This will also include all vehicles purchased under the margin scheme for resale. If you wish you may provide more information that may be useful for your contractor accounting needs. For instance reporting vehicle:

Purchase details	Sales Details
Date of procurement	Date of sale
	Margin on sale (sales price less purchase price)
Purchase invoice number	Sales invoice number
Stock number in numerical sequence
Vehicle registration number
Vehicle Description (for example, make and model)
Buying price	Sales price, or way of disposal
Name of vendor	Name of purchaser
	VAT due (margin x VAT fraction – 1/6)

You have to include the margin scheme calculations in the stock book under the suitable headings. If the price you bought the goods at happens to be greater than or the same as what you sold them for, you will not have to pay any VAT. In such an instance, the stock book entry should indicate ‘Nil’.

You are not allowed to offset any losses on goods sold against VAT owed on vehicles that have been moved on for positive margins.

How to Fill the VAT Return

At the end of each tax period, you will be required to file your VAT returns. The following are some of the specific rules to be adhered to when selling or buying vehicle during the tax period under the Margin Scheme:

1. Box 1, Insert the output tax due on all items on the scheme sold within the period.
2. Box 6, Insert the price sold on eligible items sold less the VAT due entered in Box 1
3. Box 7, Insert the gross total purchase price of all items bought 
4. Boxes 8 and 9 of your VAT return are not required to be filled in.

Requirements for Record Keeping

When using the VAT margin scheme you will need to maintain the standard VAT records

You will also be required to maintain:

• Copies of sales and purchase invoices for all items
• A stock book that tracks all individual items that you are selling under the margin scheme

You will also be required to maintain a 6 year record of VAT. The records need to be kept until the item that is intended to be sold under the margin scheme is sold even if the item was purchased more than six years ago.

Contact GM Professional accountants if you need assistance in the vat margin scheme. We have specialists that can assist you in the  cloud based bookkeeping systems such Xero cloud.