Urgent advice on corporation tax

[Tallyman]

Hi Guys,

I urgently need some advice on Ltd company corporation tax.

I started a ltd company on January 6th 2006, at the time my accountant told me that I would pay corporation tax on any money over 10k in the company account on jan 6th 2007, so it would be wise to pay myself a large dividend before the end of the year to avoid some tax.
I am the only employee and the only shareholder so I have been paying myself a low basic wage and taking dividends each month,

The first thing you will need to do is file a CT600 Corporation Tax return. Your accountant should be able to do this from your accounting records. Make sure it's in within the deadline otherwise the HMR&C will fine you, even if there is no CT to pay.

The information about tax on profits is correct. However, you could fall foul of the Companies Act if you have been paying yourself dividends when there have been insufficient profits in the company. The norm is to have a half year audit and then declare a dividend to the shareholder (yourself?). You can't pay dividends to yourself if you are only a director and not a shareholder (e.g. if the business is in the wife's name).

Make sure your accountant ain't ripping you off as well. I used one about 12 years ago when I was self employed. His bill first year was £700. He got dropped the next year as I found someone to do the same job for £200 + VAT. Also make sure he knows about both personal and business taxation (some don't) as you could miss out or get caught for tax if he's not that good.

You will also need to file an Annual Return effective on the anniversary of incorporation (6/1/07??). This is a form that Companies House will send you that must be sent back to them dated no earlier than the return date. The fee is £30 for paper forms or £15 if you can do it online but you need to set up a webfiling ID with them to be able to do this.

You will also seperately need to file annual accounts with Companies House. This is different from the CT return and must follow specific guidelines. There are strict filing deadlines for this and Companies House will levy a Late Filing Penalty of at least £100 even if it is 1 second late. Be warned.

If you need any advice (look at my job profile) give me a PM and I'll see what I can do.

[M35A2]

The first thing you will need to do is file a CT600 Corporation Tax return. Your accountant should be able to do this from your accounting records. Make sure it's in within the deadline otherwise the HMR&C will fine you, even if there is no CT to pay.

The information about tax on profits is correct. However, you could fall foul of the Companies Act if you have been paying yourself dividends when there have been insufficient profits in the company. The norm is to have a half year audit and then declare a dividend to the shareholder (yourself?). You can't pay dividends to yourself if you are only a director and not a shareholder (e.g. if the business is in the wife's name).

Make sure your accountant ain't ripping you off as well. I used one about 12 years ago when I was self employed. His bill first year was £700. He got dropped the next year as I found someone to do the same job for £200 + VAT. Also make sure he knows about both personal and business taxation (some don't) as you could miss out or get caught for tax if he's not that good.

You will also need to file an Annual Return effective on the anniversary of incorporation (6/1/07??). This is a form that Companies House will send you that must be sent back to them dated no earlier than the return date. The fee is £30 for paper forms or £15 if you can do it online but you need to set up a webfiling ID with them to be able to do this.

You will also seperately need to file annual accounts with Companies House. This is different from the CT return and must follow specific guidelines. There are strict filing deadlines for this and Companies House will levy a Late Filing Penalty of at least £100 even if it is 1 second late. Be warned.

If you need any advice (look at my job profile) give me a PM and I'll see what I can do.

Man.......

This is why I drive a truck for a living. This is total double dutch to me....

But whatever it is, it sounds like you know your stuff!!!

See what excellent advice is on this forum.

Well done that man...

[AuldNick]

Best bit is after 15 years trading the $$$$$$$s will try and take your house / life no matter how honest you have been so make sure you robbed enuf to kiss & make up

You are a thief, thats how they work, mark my words within 10-15 years trading you will owe 80-100K according to the suit.

Never EVER try to run a small honest company here in the UK!

[da SLUG man]

Man.......

This is why I drive a truck for a living. This is total double dutch to me....

But whatever it is, it sounds like you know your stuff!!!

See what excellent advice is on this forum.

Well done that man...

you're EMPLOYED???
how do you make money as an employed driver?
thought we were all going composite these days?
(nova drivers)

basically, they get payed your wage and take a small percentage of it to cover costs... then you get payed minimum wage from them... then you send them EVERY receipt for EVERYTHING, they also take into accout washing uniform, eating out etc.
pay a dividend and you pay minimum possible tax / NI

tou even claim a certain amount of mileage for driving to work!!


here's a link to NOVA http://www.novaservices.co.uk/faq.html

[Tallyman]

Man.......

This is why I drive a truck for a living. This is total double dutch to me....

But whatever it is, it sounds like you know your stuff!!!

See what excellent advice is on this forum.

Well done that man...

There are definitely times when I think driving a truck would be so much easier, especially when I get something dropped on my desk that they need today, even though they knew they needed it a week ago.

[Toylux]

Im in the same boat, Let your Accountant deal with it, I had to carry over 12k this year, and as such just paying myself a little more... if you can afford it keep it in place and god forbid if your ever with out work youlll still be able to draw a wage!!! where are you? i have a VERY VERY VERY good accountant!!! if your worried

[Pika1971]

Thanks for all the excellent advice guys.

I will have to pay corporation tax on my profits and thats that, the frustrating thing is that I have not really been claiming expenses, just taking a small wage and the rest in dividends.
My account generally seems on the ball, but she does seem to be making a few mistakes recently, and as I don't know much about accounting I need to be totally confident with her.
Any once again thanks for the response guys...

[colin timney]

i work self employed and pay myself everything i earn,then my very good accountant then puts all my earnings againts expenses and tools ect that i have bought over the year.i have worked like that for 8 years now and my accountant has never said anything about corparation tax. remember your the boss if you are not happy with her get a new accountant, and also the tax office is allways there for advice.
colin