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Summer 2004 Newsletter

From Cradle...

If you incorporate a new company, Companies House tell the Revenue, and the Revenue send you a form to get you onto their corporation tax records. Oddly, up to now there hasn't been a formal rule requiring you to send it back. Instead, you have had to notify the Revenue after the end of the first accounting period for which you have some tax to pay, which could be some time later.

This year, a new rule has come in to require notification of the start of the first accounting period. It won't matter whether you are going to make any money in it - it's the start of business that the Revenue want to know about, and you only have three months to tell them, on pain of penalties.

The trouble is, it's not always straightforward to know when you have started an accounting period for tax. It's not just the date of incorporation - you have to have a source of income, such as an interest-bearing bank account, or you have to have started a trade. And that isn't obvious either - you are trading when you are 'open for business', not when you are just setting up. So you have three months from a date which is hard to identify...

Setting up a new company is a time when most people will ask for advice, and it's just become more important to do so. We will be happy to give it.