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Company First Year & CT Return

Company First Year & CT Return

I have a client who came to me this month with overdue accounts & tax returns.

Company registered on 19th April 2009

Started trading (i.e. work done & 1st invoice raised) on 15th May 2009

First years accounts made up for the period from incorporation to 30 April 2010

As the CT Return can't be more than a 12 month period, I had prepared the return covering the period 1st May 2009 to 30th April 2010 (not sure whether it would have been more correct for the return to cover from date started trading instead of incorporation?)

I had intended to submit the return with a note on the return stating that the company didn't start trading until 15th May 2009 - however, I can't find anywhere to put a note on the CT600 Short.

However, was just about to visit the client for signing of accounts & tax return when I received 2 penalty declarations from HMRC:-

period from 19th April 2009 to 18th April 2010      £100

period from 19th April 2010 to 30th April 2010      £100

Any advice on the best way to proceed, should I continue to submit one CT Return?   I'm presuming had the client not had her head in the sand for so long & came to me sooner, one of the penalties could have been avoided?

Any comments gratefully received.


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28th May 2011 09:22

Start of trading

The return should be from start of trading to end of accounting period if not greater than 12 months. At least that will reduce the penalties.

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By paulb
28th May 2011 11:07

Your client

Have you filed with Companies House - BIG fines if not! 1 month late £150 over a month around £300! Over 3 months huge fines! 21 month rule from incorporation date!

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28th May 2011 15:15

I agree with Peter

You have only one CT accounting period (CTAP) from the start of trading on 15th May 2009 to 30th April 2010.  File a CT600 for that period only.  A penalty of £100 will apply.  Do not attempt to file a nil return for the non-trading period from incorporation on 19th April to 14th May 2009.

It sounds as if form CT41G was never filed at the outset to give the date of commencement of trade.  HMRC have therefore assumed the default - one CTAP for the year ended 18th April 2010 and another for the remaining couple of weeks to 30th April 2010.  These are replaced by the actual CTAP of just under a year to 30th April 2010.

There is no facility to provide additional information in "white space" on the CT600.

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By irnbru
28th May 2011 15:22

But how do HMRC know when trading starts?

Thanks for the comments.

So accounting period is from incorporation date to 30th April 2010 (in this case, greater than 12 months) & CT Return period from start of trading to 30th April 2010 (in this case, less than 12 months).

However, how do HMRC know for sure that trading started later, do they just assume that since the tax return is for a later date, then that's when trading starts?   It's a bit dangerous letting HMRC assume anything!   So unless I advise HMRC how will they know?   I can't find a way to include a note in the CT600 Short (I use BTC Software, which is a fantastic piece of software, but can't find a way to add a note) & since there is no paper filing I can't include a paper appendix.   So do I telephone/write to HMRC directly explaining the position - surely there must be a better way?   Any ideas?

Also, will both the £100 fines still stand even though trading started later - I presume so since the penalties have been issued, but interested to hear of anyone thinks otherwise.

As for comments re companies house fines - this was the first thing I said to client, "you are a company director, are you aware of your responsibilities, you will receive heavy fines for late submission" (explaining timescales for fines & how these increase!) - have reminded her several times verbally & in writing as we approached the deadlines.   If she is stupid enough to pay fines, not a lot I can do, I can only advise & remind, you can take a horse to water but ...  

Some people have more money than sense!

Any further comments would be very helpful.


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By irnbru
28th May 2011 15:26

Think our responses crossed over Euan

Just read your response Euan, thanks.

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By irnbru
29th May 2011 08:23

Thanks for your comments Euan, Peter & Paul

So grateful that you took the time to share you wisdom.   Thanks again.

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