The company incorporated 02/11/11. Business activities did not start until 05/01/12. Account reference date is 30/11/12. I thought that the 2 tax returns required would be
From 02/11/11 until 04/01/12
From 05/01/12 until 30/11/12
This is from following the example on https://www.gov.uk/first-company-accounts-and-return (See Your Company's First Tax Returns then scroll to Example: you started business after the company was set up)
However, when I asked the company whose accounts package we use, they suggested the following:
From 02/11/11 until 30/11/11: Company Tax Return to be filed.
From 01/12/11 until 30/11/12: Financial Statements & Company Tax Return to be filed.
Is this correct? If so, why does the Gov.uk site show their particular dates?
You are right and the company whose accounts package you use are wrong.
You have two separate issues
1. Accounting period for first period accounts
2. Period of accounts for corporation tax returns.
The dates of first is from incorporation to ARD (accounting reference date ie 02/11/11-30/11/12)
The dates of your corporation tax returns should be
1. Dormant period 02/11/11-04/01/12
2. Trading period 05/01/12-30/11/12
Unless you have notified HMRC when you have started trading using form CT41G then they will have automatically set the corporation tax periods as
1. 02/11/11-01/11/12 (12 months)
2. 02/11/12-30/11/12 (remainder)
They automatically assume you start trading on incorporation unless they are informed otherwise and split the period into a 12 month period and balance for the remaining part to the ARD. But generally most businesses dont start trading on incorporation and will usually have a dormant period, followed by a period of up to 12 months to their first ARD with anything left as a short period to the ARD.
Should really question the competency of the company you are using when they get something so basic wrong. Think it is time you looked about for another accountant.
In the accounts there were two items previous to the start of business activities which were the purchase of a mobile phone (paid with the director's personal money) and a small initial deposit in the bank account. I am not sure if this has influenced the dates given by the accountant.
Further to this, when the company was first incorporated, the form was sent back to HMRC to say that it wasn't trading as yet. Then, the CT41G was sent to them 23rd January 2012 to say that it started business activities from 05/01/12. Since that time, both VAT and PAYE have been paid but we never had anything back from HMRC with regards to Corporation Tax. I rang HMRC the other week to find out the dates, only to be told that they have the company down as dormant. I have since sent a copy of the CT41G that had originally been sent to them and am awaiting a response from them.
This is why I have been questioning the year end dates in readiness. Should the above have a bearing on the dates or do they still stand as you stated?
So if the mobile phone and bank deposit was before what you classify as trading activities then trading technically starts on the earlier of mobile phone document or bank deposit.
"business activity means carrying on a trade or profession, or buying and selling goods or services with a view to making a profit or surplus. However, you may still carry out activities (known as 'pre-trading activities') or incur costs (known as 'pre-trading expenditure') before you officially open your business without HMRC deeming that you have started trading."
Purchase of goods for selling did not occur until the 5th January 2012 which is the date that HMRC now has as the date on which the company first started trading activities.
I am now confused. Should the two entries of a pay-as-you-go mobile and initial deposit have been entered after 5th January 2012 then (but could they have been as the bank statement would obviously show the date as being opened before)?
I would just leave as is at 5 January as the overall tax liability is still going to be the same if you have a dormant period ending 5 January or sometime earlier.
