Registration and Compliance

Like individual persons, companies must conform to laws, rules and regulation in the country in which they operate. They need to register certain facts to record they exist, and they need to comply with requirements to report how they exist or operate.

 

Registration can place information about the company in the public domain. Arrangements must be put in place  to ensure compliance. Failure to do so can lead to a company incurring penalties and fines.

Companies Register

A central registry for details about a company can be found in all jurisdictions. The extent to which such information is publicly available can vary from country to country.

Companies House is the UK Registrar of Companies and is an agency of the UK government. All details provided at the time of incorporation are recorded at Companies House. Any changes are also recoded. By law these details are required to be confirmed and updated annually (Annual Return).

In addition all registered limited companies, including subsidiary, small and inactive companies, must file annual financial statements (Accounts).

There is therefore public access to information about the company, addresses, directors, company secretary, shareholders, accounts and other legal notices served on the company.

Annual Return

An annual return is a snapshot of certain company information at the date allocated for a company’s return. As a result the following details are in the public domain:

  • the name of the company
  • its registered number
  • the legal return date
  • the principal business activities of the company
  • the type of company it is – eg private or public
  • the registered office address of the company
  • the address where the company keeps certain company records, if not at the registered office, and those records held there
  • the details of the company secretary – corporate or individual – where applicable
  • the details of all the company’s directors – corporate or individual

If the company has share capital, the annual return must also contain additional information such as:

  • A statement of capital.
  • Details of the shareholders.
  • A marker to indicate whether the company was a company with any shares trading on a regulated market

Accounts

Every company whether it is trading or not, is legally obliged to keep accounting records. The directors have personal responsibility to keep such accounting records and to file a financial return each year.

The accounting period reported in the accounts is called the financial year. This starts on the day immediately after the previous financial year ended. In the case of a new company, the financial year starts on the day of incorporation. The first set of accounts may cover a period of over 12 months.

For all UK companies there are legal requirements for accounting, reporting and filing financial information. These requirements are in place to ensure that key facts about a company and its finances are not hidden from public view.

However they have to strike a balance between what is of public interest and that which is commercially confidential. Thus a public view of solvency and credit worthiness of a company is provided for the benefit of those who may trade, or provide credit, to the company. On the other hand finer details of profitability and costs incurred are not publicised as these are commercially sensitive and could be of use to competitors.

Accounting in the UK is based along similar lines to many other countries.

Accounting

Accounting for Newly Formed Companies

The majority of newly formed UK companies can initially be considered as “small entities” In subsequent years they may grow to be bigger and out of this category. However as small companies they are able to adopt a simplified approach to produce abrieviated accounts (or “short form”) for filing in the public view. Accounts in this form are limited to a summary of the balance sheet together with notes of explanation of the company’s finances. Such accounts may also be exempt from a requirement for audit (see below)

However small companies still need to prepare a full suite (or “long form”) of accounts. The primary purpose is support returns made to the UK tax authorities. Accounts in this form show detailed analysis of trading, profit and loss accounts together with balance sheets and other supporting analysis. However accounts in this form are not filed at Companies House and are not open to public view.

Audit

An auditor is a qualified accountant appointed by a company to report on its accounts. The auditor checks the accounts have been compiled, prepared and presented in accordance with the Law. Some small or dormant companies are exempt from having to submit an auditor’s report.

Tax / Corporation Tax

Corporation tax is a tax levied on the profits made by UK resident companies and on the profits of permanent establishments of non-UK resident companies and associations that trade in the EU.

The need for registration by a company is normally highlighted by the UK tax authorities shortly after incorporation. A tax return is due from a company within 12 months of the end of the financial year. Such a return is supported by long or full form accounts.

The corporation tax system is complex. Valetime Group has access to advice to help clients.

Tax / Value added tax (VAT)

UK tax authorities can also highlight a need for registration for VAT shortly after incorporation has been completed.

Value added tax (VAT) is a form of tax on consumption as it is levied on goods and services as they are consumed, used or provided. From the perspective of the buyer, it is a tax on the purchase price. From that of the seller, it is a tax only on the value added to a product, material, or service, from an accounting point of view, by this stage of its manufacture or distribution.

VAT tax operates across the EU with member countries determining a local rate of tax to be applied.

Most companies are required to register for VAT. Generally the principles of VAT are well known and appreciated but its rules in detail can be complex – especially for trading across member states and to destinations outside of the EU. VAT can be a demanding in administrative terms with regular returns due and inspections to support. Valetime Group has access to advice to help clients.

Business Activities

Many business activities may require registrations to be in place, or taken up to enhance the reputation and image of a company.

The legally required registrations covers taxation (see above) and much else. For example insurance to cover the public liabilities of the company, are a legal requirement and are a form of registration.

Certain forms of business, for example most financial activities, require registrations and perhaps licensing by supervisory bodies. Activities involving  import and exports from or to countries of the EU require registration as an Economic Operator.

Examples of registrations to enhance reputation or image are the certifications endorsed by the International Standards Organisation (ISO) for quality controls, design or logistic operations.

MLR

MLR refers to Money Laundering Regulations in the UK, which are part of an international response to a serious problem. Many international operations are subject to these controls.

Money Laundering

Companies undertaking international banking transactions are also subject to EU directives on payments and transfers. Such directives and international MLR requirements can require registrations to be in place.


Briefing on UK Companies


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