Registering with the Tax Authorities

It is important to ensure that the new business owner is compliant with the tax and information filing requirements imposed by the authorities. If the new business is not registered with the appropriate tax authorities problems and penalties could arise. This chapter summarises some of the most prominent requirements common to most businesses. However there may be special circumstances relevant to a particular trade to look into.

Inland Revenue

It is necessary for a new company to notify the Inland Revenue of its existence and thus completing forms CT41G (for companies) and CWF1 (for sole traders/partnerships). The form notifies the Inland Revenue of your accounting date, your accountant and also enables a PAYE (Pay As You Earn) scheme to be set up, which is a requirement if you are to be an employer. Failure to notify within three months may give rise to penalties.

Notification must be made to the Inland Revenue by the following dates:

  • Sole Traders/ Partnerships - 5th October following the year of assessment in which you start to trade
  • Companies - Within the first twelve months of commencing to trade or the accounting date whichever is the earlier.

Inland Revenue National Insurance Office

Depending on the level of profit, sole traders and partners have a liability to class 2 NIC and these are either quarterly or monthly by direct debit. Class II contributions are at a weekly level of £2.10 (where earnings are £4,465 or more) and the necessary form to collect Class 2 contributions should be completed at the same time as formCWF1, and must be logged within three months of starting.

HM Customs & Excise

You should consider whether our not you should be registered for VAT from the outset, there are a number of advantages and disadvantages to this:

Advantages Disadvantages
  • VAT on purchases can be reclaimed.
  • A VAT number can give the impression that the business is larger than it actually is.
  • VAT has to be paid on sales, is the amount of work involved worth it for the amount of input VAT to be reclaimed?
  • Customs and Excise tend to visit the business around every five years to ensure that VAT is being properly accounted for. If there are any errors found this may incur interest charges and penalties.
  • If you are a business turning over less than the VAT limit, you may be at a disadvantage against your competitors, particularly if you deal with the general public as they are unable to recover the VAT that you charge

However certain businesses have to register for VAT, for further details see chapter four.

Re-ocurring calendar

Date Return
19 May Submission of forms P35 & P14's
6 July Submission of form P11D
19 July Payment of Class 1A NIC
Nov/Dec Year end tax planning
31 Jan Submission of tax return

Corporation tax payments are due nine months and 1 day after the year end, for example a company with a 31 December year end should pay any corporation tax liability on the following 1 October.

Monthly

19th Payment of payroll taxes NI & Tax (under certain circumstances can be paid quarterly)

Quarterly

14 April
14 July
14 Oct
14 Jan
 Forms CT61 to be submitted & tax paid
Qtly VAT Returns (these can also be monthly or annually)

For more information, call us on 0113 274 3496 or email Clare Bruce at info@mitchellsgroup.com.

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