This is not my area and I can't really find any help online.
A buddy of mine registered and started trading his company in April 2013 with the intention of paying his taxes a couple months after the year end of April 2014. When he informed me of this I advised him he probably still needed to let HMRC know that he is now trading even if he doesn't owe them any money, and sure enough with a little bit of research we found that he should have told them within 3 months of starting the trade.
Our question now is, if he does not owe any tax at this moment in time is he going to have any issue when he does eventually notify them that he is trading and has been for 9+ months?
Many thanks for any help
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Replies (4)
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In theory, Yes
In practice, I have never heard of a penalty being imposed for late notification if the tax is paid by the correct date of 9 months after the end of the CT accounting period and the CT return is submitted by the filing deadline of 12 months after the company's accounting date.
However, there is no point in any further delay. Get your buddy to notify immediately.
Thanks for the quick reply
So we're thinking its unlikely but they can if they wanted to.
Another question then:
Are they likely to do/say anything if I help him get registered asap?
Thanks again!
Nothing to worry about
So we're thinking its unlikely but they can if they wanted to.
Another question then:
Are they likely to do/say anything if I help him get registered asap?
Thanks again!
Like Euan, I've never heard of any penalties being imposed so long as the return is filed on time and tax paid on time. Just tell HMRC that the company started trading on a particular date and then in due course they will send their formal "notice to deliver a company tax return" letter.
Just for clarity
The penalty amount is up to 100% of the tax outstanding 12 months after the end of the corporation tax accounting period in question (under Schedule 41 of FA 2008 for obligations to notify arising on or after 1 April 2010 and under para 2(3) of Schedule 18 to FA 1998 prior to that).
I've never seen a penalty imposed either, but that may be because the tax was paid by the required time. Under the new FA 2008 regime though, I would now expect HMRC's computer to automatically issue a penalty if there were unpaid tax 12 months after the end of the accounting period.
As Euan says though, if you file the CTSA return and pay the tax, there won't be any tax outstanding 12 months after the end of the accounting period, so there won't be a penalty.