Your Company's First Accounts and Tax Return

Introduction

When you set up a limited company, your first set of accounts and tax return work differently to later years. Your first accounts typically cover more than 12 months, and you may need to file two separate Company Tax Returns to cover this period. Understanding these requirements and deadlines is essential to avoid penalties.

When Your First Accounts Period Ends

Your first set of annual accounts starts on the day your company was incorporated (officially set up) and ends on your accounting reference date. Companies House automatically sets this date as the last day of the month your company was incorporated.

For example, if you incorporated your company on 11 May, your accounting reference date will be 31 May the following year. This means your first accounts cover 12 months and 3 weeks.

In following years, your accounts will normally cover a standard 12-month period (in this example, 1 June to 31 May each year).

Why You May Need to File Two Tax Returns

Your Company Tax Return covers an "accounting period" for Corporation Tax, which cannot be longer than 12 months. Because your first accounts often cover more than 12 months, you may need to split this into two separate tax returns.

Whether you file one or two tax returns depends on when your company started trading.

If You Started Trading on Your Incorporation Date

If your company started trading the same day it was set up, you must file two Company Tax Returns: one for the first 12 months and one for the remaining period.

Using the example above, if your company incorporated and started trading on 11 May 2024:

• Prepare one set of accounts covering 11 May 2024 to 31 May 2025
• File your first tax return for 11 May 2024 to 10 May 2025
• File your second tax return for 11 to 31 May 2025

After this first year, your accounts and tax returns will normally cover the same 12-month period.

If You Started Trading After Incorporation

Companies can be "dormant" for Corporation Tax purposes between incorporation and starting to trade. You tell HMRC when you started trading by adding Corporation Tax services to your business tax account.

What you need to do depends on whether you added Corporation Tax services before your accounting reference date.

You Added Corporation Tax Services Before Your Accounting Reference Date

You usually do not need to file a tax return for the dormant period. Instead, you prepare your first tax return to cover only the period you were trading.

However, you must file two tax returns if you were trading for more than 12 months during this period.

For example, if your company:

• Was incorporated on 11 May 2024
• Started trading on 22 July 2024
• Added Corporation Tax services on 26 August 2024
• Has an accounting reference date of 31 May 2025

You would prepare accounts for 11 May 2024 to 31 May 2025, then file one tax return for your trading period from 22 July 2024 to 31 May 2025.

After your first year, check the "notice to deliver a Company Tax Return" you receive from HMRC. If it covers both your dormant and trading periods, you must file two tax returns: one for the dormant period and one for the trading period.

You Did Not Add Corporation Tax Services Before Your Accounting Reference Date

You must file two tax returns: one for the dormant period and one for the trading period.

For example, if your company:

• Was incorporated on 11 May 2024
• Started trading on 22 July 2024
• Has an accounting reference date of 31 May 2025

You would prepare one set of accounts for 11 May 2024 to 31 May 2025, then file:

• Your first tax return for the dormant period from 11 May to 21 July 2024
• Your second tax return for the trading period from 22 July 2024 to 31 May 2025

Key Deadlines to Remember

For your first accounts and tax returns, you face the following deadlines:

• File first accounts with Companies House: 21 months after the date you registered with Companies House
• Pay Corporation Tax (or tell HMRC you owe nothing): 9 months and 1 day after your accounting period for Corporation Tax ends
• File your Company Tax Return: 12 months after your accounting period for Corporation Tax ends

If you file multiple tax returns, you will have separate payment and filing deadlines for each accounting period.

In subsequent years, the deadline for filing annual accounts with Companies House becomes 9 months after your company's financial year ends.

How to File

You file your annual accounts with Companies House and your Company Tax Return with HMRC separately (though some software allows you to do both at once).

You must use commercial software to file your Company Tax Return with HMRC. You can only use the paper form (CT600) if you have a reasonable excuse for not filing online or if you want to file in Welsh.

Common Mistakes to Avoid

• Missing the first accounts deadline: Remember you have 21 months for your first accounts, not the usual 9 months
• Forgetting to file a second tax return: If your first accounts cover more than 12 months and you traded from day one, you need two tax returns
• Not telling HMRC when you started trading: Add Corporation Tax services to your business tax account as soon as you start trading to avoid unnecessary filings for dormant periods
• Confusing accounting periods with financial years: Your Company Tax Return accounting period may differ from your company's financial year, especially in your first year

Both Companies House and HMRC charge penalties for late filing, so mark these deadlines clearly in your calendar.

Sources

• Your limited company's first accounts and Company Tax Return
• Accounts and tax returns for private limited companies

This article provides general guidance based on current HMRC rules. For advice specific to your situation, speak to your accountant.