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Reporting requirements for limited companies- What does a new Director need to know?
If you’ve set up your limited company, you might be wondering what else you need to do keep Companies House happy.
Companies House is the registrar of companies in the UK. It’s the Government body which registers and records company information, such as a company’s date of incorporation, its Directors, and its chosen correspondence address (registered office). Think of Companies House as being the public bookkeeper of companies in Britain; storing information from all the UK’s companies, then making this available to anyone who wishes to view it.
Once a limited company has been incorporated with Companies House, it then becomes subject to various filing requirements, some of which need to be made annually and some of which become notifiable upon certain events taking place. Most larger companies tend to outsource these filings to their Lawyers and Accountants, but Directors of new, smaller companies can do most filings themselves at the click of a few buttons online, via Companies House’ WebFiling service. This is an online service which you will be given access to upon incorporation, with a unique password and authentication code for your company.
The requirement to file information with Companies House can often catch out even the most seasoned entrepreneurs, so it’s important to be aware of what’s expected of you when starting out as a limited company owner. It’s particularly important to be aware of this as failure to file information with Companies House is a potential criminal offence, and as a Director, you can be found personally liable in Court for not keeping Companies House up to date.
Here is a quick walk-through of some of the most important documents you’ll need to file with Companies House each year. Please note that this is not an exhaustive list, and a full list of the documents which must be filed at Companies House is available on their website.
Confirmation Statement – CS01
The purpose of a Confirmation Statement is to inform Companies House of any substantial changes to your business which have occurred in the previous year, such as a change in shareholder information.
For example, imagine you own all 100 shares in your company on incorporation. Six months later, you agree to sell 50 of these shares to your friend, who is going to become your business partner. This change in shareholding will have to be recorded on the company’s next Confirmation Statement.
If nothing has changed from the date of your last Confirmation Statement, then the new Confirmation Statement will simply state that there have been no updates since the previous Confirmation Statement.
Confirmation Statements must be filed once every 12 months, with the first one being due to be filed one year after the date of incorporation. They can be completed for £13 via Companies House’ WebFiling service, or for £40 via post, with a paper form (CS01) being completed.
Your company accounts are perhaps the most crucial piece of information you’ll need to file with Companies House. A company’s first accounts must be filed within 21 months of the date of incorporation. After that, accounts must be filed by the end of the 9-month period following the end of the company’s financial year. Accounts can be filed via the WebFiling service or by using the same service as your Company tax return, using your Government Gateway ID.
There are significant financial penalties for late filings of company accounts, and these penalties get progressively higher the longer the accounts remain overdue. You will be fined £150 if your company’s accounts are 1 month late, £375 if they are up to 1-3 months late, £750 for 3-6 months, and £1,500 if they are over 6 months late.
Company accounts are usually completed by an accountant on behalf of the company. However, it’s important to briefly note that most smaller companies are exempt from strict audits, which means their published accounts don’t need to be signed off by an accountant. There are various accounting rules for Limited Companies which are outwith the scope of this article, and you should always seek advice if you’re unsure whether your company should be audited, or unsure of what particular accounting requirements your company is subject to.
Company Name change
If you decide to change your company’s name, you have to inform Companies House. This is done by completing an NM01 form via the Webfiling service or by post, with the post option costing £10.
Change of Company Articles
The Company’s articles of association are its constitution. It’s the set of rules outlining – amongst other things – what the members can and cannot do, what the procedures are for paying dividends, and how decisions are taken by Directors. With the articles being such an important document, Companies House need to be notified if there’s any changes made to them, even if these changes are minor.
When you change your Company articles, you’ll need to file a copy of the special resolution authorising the change of articles, and a copy of the new articles themselves. This can be done via the WebFiling service.
Appointment and Removal of Directors
Appointing Directors can done be by completing an APO1 form. Terminating the appointment of a Director requires a TMO1 form. Both can be completed via the WebFiling service.
Notification of a Person with Significant Control (PSC)
This will occur if a person or entity (for example, another business) begins to own 25% or more of the shares in your company. You will already have registered any persons with significant control when incorporating the company, and you will need to notify Companies House if any other person becomes a PSC throughout the lifespan of the company. For example, your friend from the earlier example who buys 50% of the shares in the company will need to be registered as a person with significant control upon taking ownership of the shares. Notification of a person with significant control can be done via the WebFiling service or by post, by completing a PSC01 form.
Change of Director Address and Change of Registered Office
If the address of a Director changes and/or the Registered Office of your company changes, this must be recorded with Companies House. Both these filings can be easily done via the Webfiling service, or by posting an CH01 form (for a change of director address) or an ADO1 form (for a change of registered office). For a change of registered office, Companies House must also be notified within 14 days of the change taking place.
Mortgage or floating charge
Companies House must be informed if you grant a mortgage or floating charge over any asset owned by your business. For example, if your company owns a small shop and decides to take out a mortgage on it, you will need to notify Companies House about the particulars of the security you are creating. This can be done via an MR01 form, which can be completed via the Webfiling service for £15, or by post for £23.
If you’re unsure about whether a change to your business requires Companies House to be notified, you can always check the official guidance on filing requirements from Companies House at the following link: Filing your Companies House information online – GOV.UK
The information in this article has been supplied by MacRoberts LLP