GSL / Foreign Companies Audit / Audit United Kingdom

United Kingdom company audit, financial statements, accounting, consulting in Great Britain

The United Kingdom is the world’s economic centre, one of the top ten most developed countries in the world. Corporate income tax ranges from 0% for non-resident partnerships to 19 – 24% for limited liability companies. With simpler financial statements, no mandatory audit (if certain criteria are met), and a high level of service offered by UK government agencies, starting a UK company is prestigious, convenient and cost-effective.

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Service packages «United Kingdom-LLP» Service packages «United Kingdom-Ltd» Legislation Tax System Audit Services
Preparation and submission of dormant accounts (for a dormant company)
770 USD
Preparation and submission of non-dormant accounts (for an active company)
USD 100-400 per hour
Company audit support
USD 100-400 per hour
Registration of a company for VAT
1 320 USD
Registration of a company in the VIES system

After Brexit, filing of VIES returns requires additionally registering for VAT in the EU member state.

(the fee depends on the jurisdiction where the additional VAT number is obtained)

Preparation and submission of VAT / VIES / INTRASTAT returns

The minimum fee is USD 620 for companies with fewer than 10 transactions in the reporting period

USD 100-400 per hour
Obtaining an EORI number for a company
770 USD
Preparation and submission of individual returns for members of a partnership
190 USD
Company strike off
1 390 USD
Apostille of financial statements (if necessary)
from 485 USD

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General requirements

Section 386 of the Companies Act 2006 requires every company to keep adequate accounting records that are sufficient:

  • to show and explain the company’s transactions,
  • to disclose with reasonable accuracy, at any time, the financial position of the company at that time, and
  • to enable the directors to prepare accounts that comply with the requirements of the Act and the UK GAAP.

The following types of legal entities are required to submit accounts:

  • LLP (Limited Liability Partnership);
  • LTD (Private Limited Company).

Audit of accounts

Unless a UK company qualifies for exemption from audit, its accounts must be audited by an auditor, and a corresponding report must be attached to the accounts for the shareholders and Companies House.

Under the Companies Act, two categories of companies are eligible for audit exemption:

  • dormant companies;
  • small companies.

A company is considered dormant if it has had no “significant accounting transactions” during the financial year. When determining if a company is dormant, the following transactions can be disregarded:

  1. payment for shares taken by subscribers (i.e. payment of the company’s share capital);
  2. fees paid to Companies House for a change of company name, the re-registration of a company and filing an Annual Return (i.e. payment of filing fees);
  3. payment of penalties for the late filing of Annual Accounts with Companies House.

A company is considered small in its first financial year if it meets at least two of the three below conditions in that year.

A company is considered small in subsequent financial years if:

  • the below conditions are met in the current and previous financial year;
  • the below conditions are met in the current financial year and the company qualified as small in the previous financial year;
  • the below conditions were met in the last financial year and the company qualified as small in the previous financial year.

Conditions for a company to qualify as small (at least two must be met simultaneously):

  • annual turnover of no more than GBP 10.2 million;
  • balance sheet total of no more than GBP 5.1 million;
  • average number of employees of no more than 50.

The following companies are required to conduct an audit:

  1. Public companies and companies in some regulated industries.
  2. An authorised insurance company or a company that carries on insurance market activity.
  3. A banking company or an e-money issuer.
  4. A Markets in Financial Instruments Directive (MiFID) investment firm or an Undertakings for Collective Investment in Transferable Securities (UCITS) management company.
  5. A scheme funder of a master trust pensions scheme or a special register body or an employers’ association for the purpose of the trade union and labour relations framework (“a pensions or labour relations body”).
  6. A parent company or a subsidiary, if the qualifying criteria for a small company are exceeded.

Period for preparing and filing accounts

The Companies Act sets the following periods for filing accounts (for companies with financial years starting on or after 6 April 2008):

  • for limited liability companies (Ltd) – 9 months after the Accounting Reference Date / ARD (for the first accounts – within 21 months of the incorporation date);
  • for limited liability partnerships (LLP) – 9 months after the ARD (for the first accounts – within 21 months of the incorporation date);
  • for public companies (Plc) – 6 months after the ARD (for the first accounts – within 18 months of the incorporation date).

The accounting reference date (ARD) is defined as the last day of the month in which the company was incorporated.

As in many jurisdictions, the first financial year can be extended up to 18 months.

It is also possible to change the end date of the financial year. Change is possible once every 5 years.

Period for preparing and filing tax returns

Tax return filing period for LTD (CT600)

All limited companies are required to file a tax return CT600 within 12 months of the end of the financial year.

The corporate tax return filing deadline is the latest of the following:

  • 12 months from the end date of the tax period for which the return is made;
  • if the relevant reporting period (in the accounting sense) does not exceed 18 months, then 12 months from its end date;
  • if the relevant reporting period (in the accounting sense) is more than 18 months, then 30 months from its start date;
  • 3 months from the date of receipt of the notice requesting to file a return (CT603).

Tax return filing period for LLP (SA800)

Every partnership and each partner in a partnership must file the following forms:

  • SA100 – tax return for partnership’s partners, which declares the total income received in the UK both through the partnership and from other sources;
  • SA104S – short version of the tax return regarding the partnership’s income, filed by partners;
  • SA109 – form recording the residence of a partner;
  • SA700 – tax return of a partner who is a UK non-resident;
  • SA800 – tax return that limited liability partnerships (LLPs) are required to file.

There are 2 deadlines for filing returns:

  • by 31 October, if filed in paper form;
  • by 31 January, if filed electronically.

Penalty for late filing of accounts

Late filing of accounts is a criminal offence. There are also administrative sanctions for late filing. The sanctions depend on how late the accounts are submitted:

Delay:
Penalty for a private company
Penalty for a public company
up to 1 month
GBP 150
GBP 750
from 1 month to 3 months
GBP 375
GBP 1500
from 3 months to 6 months
GBP 750
GBP 3000
over 6 months
GBP 1500
GBP 7500

If accounts are filed late a second year in a row, the fines are doubled.

Penalty for late filing of a tax return

There is a fixed penalty for late filing of a tax return, whether CT600 or SA800:

  • if filed within 3 months after the deadline – GBP 100,
  • if filed more than 3 months late – GBP 200.

If a company has failed to meet the deadlines for filing tax returns for two tax periods in a row (including short periods), the penalty increases to 500 GBP and 1000 GBP respectively for the third period.

In addition to this, a further penalty is imposed if the return is filed later than 18 months after the end of the tax period:

  • if filed within 2 years of the end of the tax period – 10% of tax remaining unpaid after 18 months after the end of the tax period;
  • in other cases – 20% of this amount.

Consolidated accounts (group accounts)

The Companies Act requires all UK companies that have subsidiaries to prepare and submit consolidated accounts (group accounts).

Subsidiaries are companies that are more than 50% owned by another entity. There are cases where a company owned 50% or less is considered to be a subsidiary if it is controlled by the parent company. A company controls a subsidiary if the following conditions are met:

  • a company has the power to govern the financial and operating policies of a subsidiary;
  • a company has the power to appoint or remove the majority of the members of the board of directors of a subsidiary;
  • a company has the majority of votes at meetings of the board of directors of a subsidiary.

A UK parent company must prepare the group’s consolidated accounts if this company exceeds the qualifying criteria for a small company. The group accounts must be accompanied by an auditor’s report made by an independent registered auditor.

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