Companies incorporated in the United Kingdom have an obligation to Companies House, the UK Registrar of Companies. All businesses must deal with HM Revenue & Customs (HMRC), the UK tax authorities.
During UK company incorporation, it’s crucial for business owners to understand the roles and responsibilities of Companies House and HMRC.
In this article, we will highlight the roles and responsibilities of these government agencies and information companies need to send them to remain compliant.
Who are Companies House and HMRC?
Companies House is the executive agency of the British Government responsible for maintaining the register of companies in the United Kingdom.
They incorporate, dissolve, and register UK limited company information and make it available to the public.
HM Revenue and Customs (HMRC) is a non-ministerial department of the UK Government. The national taxing authority of the United Kingdom collects all direct and indirect taxes and administers benefits and tax credit payments to residents.
Though the two agencies perform different functions, they work closely together. Companies House provides HMRC with updates on newly incorporated companies and changes in company information.
HMRC collaborates with Companies House when sharing filing systems such as the company’s financial statements and annual accounts.
Additionally, they both work closely to fight economic crime, enhance corporate transparency, and improve the quality of companies’ registered data.
What are the roles of Companies House?
Incorporate and maintain companies
Companies House incorporates companies in England & Wales, Scotland, and Northern Ireland.
It maintains companies’ information including limited companies, LLPs, and other incorporated structures.
When you set up a company, Companies House processes and approves your application, issuing a certificate of incorporation. You should also keep in mind that you need to obtain the business licenses according to the activities you will develop later.
Dissolve companies
Companies House is in charge of dissolving companies in the UK under specific circumstances. A company can be dissolved in two ways. Voluntary strike off and compulsory strike off.
A company can apply to be struck off the register and dissolved voluntarily. Companies House can initiate this process when a company fails to meet legal requirements such as not filing annual accounts.
Public Register
Companies House examines and publishes company information on the public Register of Companies and the Register of Overseas Entities.
Companies’ information is publicly accessible such as the:
- company name
- registration number
- company structure
- registered office address
- directors and company secretaries’ details (current and resigned)
- nature of the business
- details of people with significant control (PSCs)
- copies of all transactions filed at CH, including annual accounts and confirmation statements
- date of the last accounts or confirmation statement filed
- date of the next accounts or confirmation statement due
- mortgage charge data
- insolvency information
Transparency and growth
Companies House promotes transparency and contributes to the growth of the UK economy. They share data related to diversity, inclusion, growth, performance, pricing breakdowns, internal processes, and hiring practices.
They will also actively combat crime by sharing relevant information with law enforcement and regulatory bodies.
What are the roles of HMRC?
Tax collection
HMRC collects various taxes such as income tax, corporation tax, capital gains tax, inheritance tax, Value-Added Tax (VAT), excise duties, stamp duty land tax, and climate change levy.
It ensures that individuals and businesses pay their taxes correctly.
Customs and trade compliance
HMRC manages customs control, revenue collection, and trade compliance.
It facilitates legitimate international trade and protects the UK’s fiscal, economic, social, and physical security at the border.
Statutory payments and financial support
HMRC administers statutory payments e.g. statutory sick pay, and statutory maternity pay. Provides targeted financial support through tax credits and administers Child Benefit.
Anti-Money Laundering Supervision
HMRC oversees anti-money laundering efforts to prevent financial crimes. Businesses subject to AML regulations must register with HMRC.
Before registering, businesses must complete an anti-money laundering risk assessment.
HMRC must also establish policies, controls, and procedures to manage and mitigate identified risks. HMRC rejects applications without these essential components.
Companies’ obligations to Companies House
Once you incorporate your UK limited company, you have a legal obligation to file certain information with Companies House and report any changes to your registered details.
The key obligations include:
Annual Accounts
Companies incorporated in the UK must prepare and deliver annual accounts by the statutory deadlines every year. These accounts show how your company has performed over the accounting period.
An annual report is a comprehensive report on a company’s activities throughout the preceding year.
Annual accounts must be filed within nine months after your accounting reference date while confirmation statements need to be filed annually within 14 days of the end of your confirmation period.
Confirmation Statement
Alongside annual accounts, you must submit a confirmation statement. This is a document that limited companies and LLPs must submit to Companies House annually.
With a Confirmation Statement, companies can inform Companies House of the business details on the public register that are up to date.
The confirmation statement confirms essential company details, such as shareholders, directors, and registered addresses.
Other filings to Companies House include:
- Directors and secretaries
- Resolutions
- Change of constitution
- Share capital
- Re-registration
- Company records
Businesses’ obligations to HMRC
All businesses operating in the UK either a sole trader or a limited company have an obligation to the HMRC.
VAT Registration
VAT registration applies to limited companies and self-employed business owners. If your business’ annual turnover surpasses the VAT registration threshold, which is £90,000 as of 1st April 2024, you must register for VAT with HMRC.
Additionally, your businesses must register for VAT if:
- your business’ VAT taxable turnover for the last 12 months is more than £90,000
- you expect your turnover to go over £90,000 in the next 30 days.
- you only sell goods or services that are exempt from VAT but you buy goods for more than £90,000 from EU VAT-registered suppliers to use in your business.
- your turnover is less than £90,000 through voluntary registration.
- you take over an existing business that is VAT-registered.
- you can also voluntarily register for VAT
Once registered, you’ll be responsible for submitting VAT returns to HMRC quarterly or annually.
Income Tax Implications
After UK limited company formation, the owner will need to register with HMRC so that they can issue a second tax code for your salary from the company.
For sole traders, if their annual sales exceed £1,000, they must also register with HMRC.
Construction Industry Scheme (CIS)
Contractors and subcontractors in the construction industry have specific obligations under the CIS. They must comply with CIS rules and report payments to HMRC.
Pay As You Earn (PAYE)
If your business has employees, you are required to deduct Income Tax and National Insurance contributions before you pay wages or pensions.
Employees who are paid through PAYE, do not need to pay further taxes to HMRC since the employer must pay taxes to HMRC.
Self-employed individuals are responsible for filing a tax return and paying income tax, and national insurance directly to HMRC.
Self- Assessment
Self Assessment is a system used by Her Majesty’s Revenue and Customs (HMRC) in the UK to collect Income Tax from individuals with non-standard income sources.
A self-employed person must register for Self Assessment with HMRC after the end of the tax year in which you started trading.
With Self-Assessment, self-employed individuals can declare and pay personal tax on their business income on an annual basis.
In conclusion, before UK company incorporation, you should familiarise yourself with Companies House and HMRC. Know your business or companies’ obligations towards them to stay compliant. Not to miss Companies House deadlines to file statutory documents, you can sign up to receive email reminders from them.
If you would like to set up a company in the UK, you can reach BusinAssist at info@businassist.com.
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