Running a limited company in the UK comes with certain legal responsibilities. While setting up and managing a Ltd company provides benefits like limited liability, you must fulfil certain obligations to stay compliant with Companies House and HMRC. This article outlines the key legal duties of a Ltd company director and shareholder.
File Your Accounts and Tax Returns
One of your main legal duties is to file and submit your annual accounts and Company Tax Return to Companies House and HMRC. Accounts must follow UK GAAP standards and give a true and fair view of your finances. Your Corporation Tax Return must be completed accurately with all relevant supplementary forms.
Deadlines are strict – accounts must be filed within 9 months of your financial year-end. Failure to submit on time can lead to automatic penalties.
Comply with HMRC’s Making Tax Digital
Making Tax Digital (MTD) requires you to keep digital records and file VAT returns using MTD-compatible software. This rolled out in 2019 for VAT-registered companies with over £85,000 in taxable turnover. From 2024, it applied to all VAT registered firms.
Stay compliant by using approved software to keep digital records and connect seamlessly with HMRC via an Application Programming Interface (API). Submit VAT returns directly from your software.
Hold Company Meetings
You must hold certain company meetings depending on your ownership structure. For single director Ltd companies, you need to hold an annual general meeting (AGM) within 18 months of incorporation and each year after. Private Ltd companies are also required to hold annual general meetings if there are multiple directors.
Ensure you hold and document AGMs properly with minutes. Other company meetings you may need to hold include board meetings and shareholders meetings. Stay organised with all company resolutions.
File Changes at Companies House
Any changes to your Ltd company must be officially registered at Companies House. This includes changes to your registered office address, directors, shareholders, accounting reference date, business name, and other details.
Use the correct forms for each change and submit within the prescribed time limits. This keeps your company record up to date.
Maintain Statutory Records
There are various statutory records Ltd companies must maintain. This includes keeping registers of shareholders, directors, officers, and secretaries. You must also keep copies of resolutions, director meeting minutes, contracts, and accounting records for the prescribed timeframe.
Having good record keeping practices ensures compliance and is useful for managing your company. Stay on top of filing deadlines for submissions too.
Adhere to Annual Return Requirements
Most Ltd companies must complete an annual return known as a ‘confirmation statement’ to provide data on your company. It confirms key details on your directors, shareholders, shares, and registered office.
Complete your confirmation statement fully and accurately each year after your company anniversary. There is a £40 fee if you file by the deadline. Late filing will cost you £150, so schedule it in!
Get Your Accounts Independently Audited
Limited companies with an annual turnover of over £6.5 million must have their annual accounts audited by a registered auditor. This verification provides assurance that your accounts are true and fair.
If your company grows over this threshold, make sure you get your accounts audited in line with legal requirements. Even if you are below the threshold, an independent review of your finances can provide useful accountability.
Considering taking a finance for startups course? Learning how to read company accounts is invaluable for any Ltd company director. Many providers offer short courses and online learning specifically aimed at small business owners looking to better understand their company finances and reporting obligations. Investing in your financial literacy can pay dividends.
Fulfilling your statutory duties keeps your Ltd company legally compliant. While it may seem like a lot of administration, staying on top of your legal responsibilities protects you from penalties further down the line. Good practices also set your company up for success.
Dariel Campbell is currently an English instructor at a university. She has experience in teaching and assessing English tests including TOEFL, IELTS, BULATS, FCE, CAE, and PTEG. With over a decade of teaching expertise, Dariel Campbell utilizes his knowledge to develop English lessons for her audience on English Overview.
