Accounts are due for filing 9 months after the company’s financial year end. However, if it is your first financial year the deadline is 21 months after you registered with Companies House .
Your financial year end will be automatically set at 12 months after you register with Companies House (i.e. if you register on 26 May 2020, your financial year end will be 31 May 2021).
Corporation tax is payable 9 months and 1 day after the end of your accounting period.
If you miss your company’s filing deadline you will have to pay penalties, this depends on how late you are at filing your accounts, from £150 for up to 1 month late, up to £1,000 for more than 6 months late.
There are three key stages to an audit:
Planning
This includes the administration of the audit, undertaking a risk assessment and designing tests to address the key risks identified .
Gathering evidence
This is the actual testing stage where we gather evidence, which could involve some or all of the following:
Any discrepancies which are found will be discussed with the directors to allow them a chance to adjust the financial statements before they are finalised .
Conclusion
This is where we assess the evidence we have gathered and conclude on whether the financial statements are free from material misstatement. Our opinion will hopefully be ‘unqualified’ which means that we are saying that the financial statements are true and fair.
Yes, you can shorten your company’s year end as many times as you like. You can also lengthen the financial year end by a maximum of 6 months, however you can only do this once every 5 years.
You cannot change your year-end if the accounts are overdue.
If your company is actively registered at Companies House you need to submit accounts whether you are trading or not. If you would like to keep your company open but not trading then you will need to submit dormant company accounts.
You must keep records for six years from the end of the last company financial year they relate to, or longer if:
Advice and guidance can vary on a case by case basis so if you would like to obtain further information, including an answer tailored to your specific circumstances, please do get in touch and we would be more than happy to help.
An audit of a company’s financial information is an independent examination of the relevant evidence that supports the numbers and disclosures in the statutory accounts and the significant judgements and estimates made by directors in preparing those financial statements. A statutory audit can only be carried out by a firm of Registered Auditors and aims to provide an independent opinion on the truth and fairness of your financial statements.
A company is legally required to have an audit if it exceeds 2 or more of the following thresholds:
Some companies must have an audit even if they do not meet these criteria, including if:
Even if you are not required to have an audit, you may choose to have one as it adds credibility to the company and provides comfort to the stakeholders that the financial statements show a true and fair view of the state of the company.
Yes, any business can have an audit even if it doesn’t need one as a statutory requirement. An audit will provide stakeholders with a level of comfort over the accuracy of the financial statements as they have been subject to an independent examination. An audit can also provide the company with valuable feedback on areas where you could improve processes or record keeping.
Each company is different and the exact work which will be undertaken will depend upon our risk assessment of your business. It is not possible to test every single transaction within the financial records as this would take too long. Instead we consider the materiality of a balance in order to select samples of transactions to test.
There are three key stages to an audit:
Planning
This includes the administration of the audit, undertaking a risk assessment and designing tests to address the key risks identified .
Gathering evidence
This is the actual testing stage where we gather evidence, which could involve some or all of the following:
Any discrepancies which are found will be discussed with the directors to allow them a chance to adjust the financial statements before they are finalised .
Conclusion
This is where we assess the evidence we have gathered and conclude on whether the financial statements are free from material misstatement. Our opinion will hopefully be ‘unqualified’ which means that we are saying that the financial statements are true and fair.
Information is considered to be ‘material’ if its omission or distortion would impact the users understanding of the financial statements. We base our testing on a how material we consider individual balances to be. Materiality is based on the size of the balance, but also takes into account more qualitative considerations as well.
Our audit report states whether or not the financial statements show a true and fair view of the company’s financial position. If so, the audit report will be unqualified. If we cannot conclude that the financial statements show a true and fair view, possibly because you are unable to provide us with the evidence we need to see, then the report may have to be qualified.
Yes this is true, unless the parent company is established in the UK and prepares consolidated accounts, it will require an audit.
Yes, we could undertake an assurance review instead. An assurance review doesn’t provide the same level of assurance as an audit, however it is still an independent examination and can provide added credibility to the company’s financial information.
An assurance review provides an additional level of confidence to the users of the financial statements. Following the review, a report can be appended to the financial statements to highlight that a review has been undertaken and that nothing has come to our attention to suggest that the financial statements do not show a true and fair view.
An assurance review is more flexible than an audit and the exact work which we undertake can be tailored to your requirements in order to provide assurance over particular areas of the financial statements.
At the start of our work, we would work with the directors to identify the areas which are most important or highest risk and our work would be directed towards these areas.
The work we undertake is not as comprehensive as for an audit, and as such it will not provide the same level of assurance, however it will provide users of the financial statements with a level of confidence that the key areas reviewed.
This is a difficult question to answer without more information about your company, as the amount of work involved will vary for every company.
Our typical fees to undertake an assurance exercise start from £3,000 and an audit start from £6,000 for a small audit exempt company (or subsidiary of an overseas parent) and from £12,000 for a statutory audit for a company who exceeds the audit thresholds, however, the exact price depends on the size of the company and the number and complexity of transactions within the company’s financial records.
In the UK, it is a statutory requirement for all companies to have an audit unless they are exempt. This means that the company does not exceed the audit thresholds or has a parental guarantee in place. The audit thresholds are exceeded if two or more of the following apply:
If your company does not exceed the audit thresholds, an audit is not compulsory but you may still opt to have one.
As we complete our testing, we make a note whenever we cannot successfully complete our tests, or when we find any differences. It is normal to find differences, and in most cases these are small (trivial). Once we have completed all of our work, we will collate all of the differences and see if these are material in total. At the end of the audit, we will go through any issues with you, such as where we are unable to complete any of our tests or where the total of the differences is material, and discuss the options, which could include adjusting the financial statements or qualifying the audit report.
Automatic enrolment is a Government initiative to help employees contribute to a pension scheme at work. Automatic enrolment means that all employers will need to enrol all eligible employees into a workplace pension scheme.
Auto enrolment applies to all employees in the UK if they meet the following criteria :
Automatic enrolment makes it compulsory for employers to automatically enrol their eligible workers into a pension scheme.
Once an employee is enrolled they have a 30 day opt out period in which they may choose to opt out and get a full refund. If employees wish to leave the scheme after the opt-out period, they can cease active membership. It is illegal for an employer to tell an employee to opt out.
The minimum contribution, which is currently 3% for employers and 5% for employees.
As part of the ongoing process, aside from making the monthly deductions and process the monthly pension payments. Employers are also responsible for managing opt in and opt out requests, monitoring new and existing employees, keeping records up to date and re-assessing employees every three years.
Every three years, you’ll need to re-enrol workers who are eligible for Automatic Enrolment but aren’t in a qualifying scheme. This includes workers who have previously:
An eligible jobholder is a worker who is aged at least 22 and under State Pension age and is earning more than the current tax year threshold. The process of re-enrolment is the same as it was for Automatic Enrolment. Once the assessment for re-enrolment has been completed and any eligible jobholders have been identified, they will need to be enrolled into a scheme as a normal new employee.
Even if you do not have any staff members to put back into the scheme you must complete the re-declaration of compliance to let the Pension Regulator know that you have met your duties. This is a legal obligation and if you do not complete this the company could be fined.
Your employee can opt out of the scheme within one month of being automatically re-enrolled, they will be treated as if they had never joined the scheme, and any money that they have paid into the scheme will be refunded in full.
You should look at different schemes before you decide which is suitable for you and your staff. The following are some examples of schemes open to small employers:
There are a number of things you should check before you choose a pension scheme. This includes whether it will accept all your staff, how much it will cost, whether it uses the best tax relief method for your staff and whether it will work with your payroll.
An employer may postpone enrolling employees for a maximum of three months. This gives both the employer and employee chance to ensure both happy with the new role.
Employers are required to continue automatically enrolling eligible workers who’ve opted out, every three years. They are also required to complete a re-declaration of compliance every three years for the pension regulator to guarantee their compliance. If employees opted out three years ago and are still eligible jobholders, they must be re enrolled into an auto enrolment pension scheme.
Budgeting is tricky for start-ups - you rarely have an existing model to work from. Do your due diligence by researching industry benchmarks for salaries, rent and marketing costs.
Ask your network what you can expect to pay for professional fees, benefits, and equipment. Set aside a portion of your budget for advisors – that’s accountants, solicitors, that kind of thing.
Since you don’t have any historic financial data to review, make sure to use projected costs. For example, if you have signed a lease for office space, use the monthly rent you will pay moving forward.
Your budget is your planned revenue and spending. It allows you to plan for the future and review your excess spending. Consider preparing a budget monthly, quarterly, or annually.
Cashflow forecasts are typically more frequent, often monthly, and focus on the cash ins and outs for your business. A cashflow forecast predicts future trends and gives a realistic idea of when your business is going to require a cash injection to avoid problems.
Both budgeting and cashflow forecasting are important forecasting tools for business. They can help you keep on top of your bills and can also prove useful if you are trying to get finance (it shows lenders you can pay them back).
Not at all! The best budgets are simple and flexible, and they therefore come in all shapes and sizes.
The key is on focusing the budget to your business as this allows you to channel in on what is important to you and what actionable changes you need to make to achieve your financial goals.
Putting in the work to create your budget may seem like a hassle, but whilst it will take a bit of time and energy at first, it is worth the extra effort in the long run.
Thorough business budgeting gives you the financial insights you need to make the right decisions for your business to grow, scale, and prosper in the future.
The best forecasts are comprehensive and realistic.
Not at all! The best forecasts are simple and flexible, and they therefore come in all shapes and sizes.
The key is on focusing the forecast to your business as this allows you to channel in on what is important to you and what actionable changes you need to make to achieve your financial goals.
Your budget is your planned revenue and spending. It allows you to plan for the future and review your excess spending. Consider preparing a budget monthly, quarterly, or annually.
Cashflow forecasts are typically more frequent, often monthly, and focus on the cash ins and outs for your business. A cashflow forecast predicts future trends and gives a realistic idea of when your business is going to require a cash injection to avoid problems.
Both budgeting and cashflow forecasting are important forecasting tools for business. They can help you keep on top of your bills and can also prove useful if you are trying to get finance (it shows lenders you can pay them back).
Put simply, a well thought out forecast can:
Forecasting is tricky for start-ups - you rarely have an existing model to work from. Do your due diligence by researching industry benchmarks for salaries, rent and marketing costs.
Ask your network what you can expect to pay for professional fees, benefits, and equipment. Set aside a portion of your forecast for advisors – that’s accountants, solicitors, that kind of thing.
Since you do not have any historic financial data to review, make sure to use projected costs. For example, if you have signed a lease for office space, use the monthly rent you will pay moving forward.
There are numerous pieces of software which are able to perform increasingly complex cashflow forecasts. The best ones will feed directly to and from your existing bookkeeping software (Xero, QuickBooks etc.) to help improve the accuracy of your predictions.
We work closely and regularly with many software providers so please speak with us if you would like any advice on where to get started.
The Construction Industry Scheme (CIS) is a scheme designed by HMRC to minimise tax evasion within the construction industry. Tax is deducted at source from the subcontractor by the contractor and then paid over to HMRC on their behalf. CIS rules apply to all payments made by a contractor to a subcontractor for construction work as defined by HMRC.
Contractor:
Subcontractors:
A contractor is a business (limited company, partnership or self-employed individual) that pays subcontractors for construction work. Private householders are not counted as contractors so are not covered by the scheme.
A subcontractor is a business (limited company, partnership or self-employed individual) that carries out construction work for a contractor.
Contractor:
You must register as an employer, before any payments to subcontractors. Please be aware it can take up to 20 working days to receive an employer PAYE reference number. To register online, please click here.
Subcontractor:
To register online please click here. You can also ring the HMRC CIS helpline to register or receive help with the online application: 0300 200 3210.
0300 200 3410
You will also need to quote your company’s UTR to discuss any affairs with HMRC.
Unless you agree a payment date with your customer, they must pay you within 30 days of getting your invoice or the goods or service.
Setting up your own payment terms, such as discounts for early payment or upfront payment can help if you have any cashflow problems.
The best solution to debt collection is to be proactive. It is all too easy for a customer to ignore emails, so in cases where this is happening, pick up the phone and give them a call. It is much harder to avoid a topic of conversation on a call than it is an email and once you raise with the customer, you may well find they are more than happy to settle shortly after.
If you continue to have issues, don’t be afraid to reduce the payment terms or request payments upfront for future products/services. It shows you aren’t willing to continue with the payment relationship as it is and helps reduce your exposure to risk, should that customer become a bad debt in the future.
There are two primary ways to reduce time spent on your billing process:
1) Technology – Cloud software can save you plenty of time if used effectively, e.g. repetitive fees can be automatically raised and emailed on a periodic basis. Spending a little time to set them up now can save significantly more time down the line.
2) Process – If the process feels too cumbersome, then it probably is. Go through the process and critically view each step and it’s importance to identify which areas aren’t necessary and better yet, which tasks can be better managed through use of cloud technology platform and automation.
EIS is designed to help your company raise money to help with business growth. It does this by offering tax relief to individual investors who buy new shares in your company.
SEIS is designed to help your company raise money when it is starting to trade. It does this by offering tax relief to individual investors who buy new shares in your company.
Your company can use the scheme if it:
Your company and any qualifying subsidiaries must:
You must use the investment for a qualifying trade.
Most trades will qualify, including any research and development which will lead to a qualifying trade.
However, your company may not qualify if more than 20% of your trade includes things like:
Under the EIS scheme investors could claim back up to 30% of the value of their investment in form of income tax relief.
Under the SEIS scheme investors could claim back up to 50% of the value of their investment in form of income tax relief.
The money you raise from the investment must be spent within 3 years of the share issue. You must spend the
money on either:
You cannot use the investment to buy shares, unless the shares are in a qualifying 90% subsidiary that uses the money for a qualifying business activity.
SEIS focuses on smaller businesses in their first two years of trading, whereas EIS is aimed at helping businesses to grow who have been trading between two to seven years.
Each scheme has different qualifying criteria and the tax incentives are also slightly different for investors.
Your company can use the scheme if it:
Your company and any qualifying subsidiaries must:
If you have received investment through the Enterprise Investment Scheme (EIS) or from a venture capital trust, you cannot use SEIS.
If your company owns or controls any other companies, they must be ‘qualifying subsidiaries’.
This means:
The subsidiary must be at least 90% owned by your company where either the:
The money raised by the new share issue must be used for a qualifying business activity, which is either:
The money raised by the new share issue must:
The investment in your company must meet the risk to capital condition, which means:
You can receive investment under EIS if it is within 7 years of your company’s first commercial sale, or if part of a group, the group’s earliest commercial sale.
If you received investment in this period under EIS, SEIS, SITR, VCT or other state aid, you can use EIS to raise money for the same activity as long as you showed you were planning to do so in your original business plan.
If you did not receive investment within the first 7 years, or now want to raise money for a different activity from a previous investment, you will have to show that the money:
From 1st April 2019, HMRC introduced a digital service for VAT records and return submission. VAT registered businesses with a taxable turnover of more than £85,000 must follow the rules for ‘Making Tax Digital for VAT’ by keeping some records digitally. From 1 April 2022 all VAT registered businesses must sign up, whatever they earn.
If a new employee does not have a P45 containing details of previous gross pay and income tax deducted in the tax year, the employee will need to complete a new starter checklist
On a starter checklist, an employee is asked which statement applies to them:
Depending on which statement is picked, they will be allocated a tax code which will allow you to work out the tax due on their first payday.
HMRC will send out a P800 tax calculation form after the tax year ends on 5 April, which your employee should receive by the end of November. This will show how much tax is due to be refunded, or is owed from previous years.
If they haven’t paid enough tax through PAYE, HMRC will collect the tax they owe in instalments over the next year. This will happen automatically if they:
HMRC will write to them about how they can pay if they cannot collect the money this way. Your employee's P800 will usually state that they can pay the tax they owe online.
If they have paid too much tax, their P800 will tell them if they can claim a refund online, or if HMRC are sending them a cheque. If they claim online they’ll be sent the money within 5 working days. If HMRC state that they are sending a cheque, they do not need to make a claim, the cheque will automatically be sent to them and they should receive this payment by the September after the end of the tax year.
If they do not claim an online refund within 42 days, HMRC will send them a cheque automatically. They should get this within 60 days of the date on their P800.
Research and development (R&D) tax credits are a government incentive designed to reward UK companies for investing in innovation. They are a valuable source of cash for businesses to use to invest and ultimately continue growing.
Companies that spend money on qualifying R&D activities can make a R&D tax credit claim to receive either a cash payment and/or Corporation Tax reduction. If you’re making a claim for the first time, you can typically claim R&D tax relief for your last two completed accounting periods.
There are two tax credit schemes; SME R&D tax credit and R&D Expenditure Credit (RDEC). Which scheme you use to make an R&D tax credit claim will largely depend on whether you are an SME or a large company. Please see contact us for more information.
