Offices across the Midlands see our website for more details. For more information, please call:

Transcription

1 Offices across the Midlands see our website for more details For more information, please call:

2

3 ACTIVE PRACTICE UPDATES FEBRUARY 2015 Choosing a company secretary This guide looks at the role of the company secretary and how to select a suitable candidate Business UPDATE Compliance for private limited companies in the UK means ensuring that the business is trading lawfully with all the many rules and regulations being adhered to. In the past, the person responsible for this role was clear cut: every private limited company was obliged to have a company secretary. However, in 2008 the law changed and there is now no legal requirement to have one, although some companies still choose to do so. So do you need one or not? While the job title may be superfluous to requirements nowadays, the duties carried out by a company secretary are still a legal requirement under the Companies Act. The person carrying out the duties is jointly responsible with the directors for ensuring the company complies with the law, and as such, can be prosecuted if they fail to do so. Failing to comply The change in regulations misled some business owners into thinking that the duties were no longer a serious matter. However, those in any doubt about the efficacy of company law would be advised to take a look at the list of offences the Crown Prosecution Service has drawn up. keep separate register of directors residential addresses (Level 5 fine- currently 5,000). Full details of all the offences can be found on the Crown Prosecution Service website. Duties The duties will depend to some extent on the size and type of business you run. While some duties, such as reporting and filing to Companies House are legal requirements, others are what is generally expected of someone undertaking the role of company secretary, whether on a formal basis or not. Typical tasks include: maintaining statutory books such as registers of members and registers of transfers of shares being aware of changes in legislation and regulations and taking action where necessary ensuring the company complies with all legal and statutory requirements. We can advise on the responsibilities of a company secretary. Examples of offences include failing to have company name engraved on seal (Level 3 fine- currently 1,000) and failing to Offices across the Midlands see our website for more details For more information, please call:

4 Choosing a company secretary Who can be a company secretary? In theory the person who started the business can be both the director and carry out the role of company secretary. However, the role requires a very particular set of skills. They need time and focus to carry out, all of which could divert the business owner from the more pressing and possibly more exciting process of running the business. If you decide to appoint a company secretary, that person doesn t necessarily have to be a director. A company secretary is an officer of the company and shares the legal responsibilities of the directors, whether they are a director or not. Choosing a company secretary Someone with good organisational skills who enjoys making meticulous records, has a good capacity for attention to detail and who has never knowingly forgotten to do something would make an ideal company secretary. While this person doesn t need any formal qualifications, given the scope and responsibility of the role it is advisable to choose someone with training, knowledge and experience. The only people who legally cannot be a company secretary are the company s auditor or an undischarged bankrupt. Having excluded these, experience shows that another group of people who are often unsuited to the task are the business owners themselves. This is because most people who start their own businesses are entrepreneurs with vision, drive and ambition. They are good at closing deals, motivating people and negotiating with customers and suppliers. They also tend to be creative and charismatic. While these are exactly the right qualities for a successful entrepreneur, they are in some ways the polar opposite of the qualities needed to take on the responsibilities of the company s legal and financial duties. Outsourcing your company secretary Many small and growing businesses choose to outsource the role, and with good reason. As there are only so many hours in a day, even the most committed and ambitious entrepreneur can be tempted to put compiling an agenda for a meeting or monitoring changes in the regulatory environment on the mounting to-do list. While many items can happily reside in a to-do list for weeks or even months, failing to submit accounts on time, forgetting to notify a change in address, register of members and directors or neglecting to renew insurance cannot. How outsourcing works Outsourcing company secretarial work is like outsourcing any other specialist role. It makes sense to choose professionals who live and breathe their chosen speciality. Payroll and HR are just 2 examples of disciplines that are successfully outsourced. The result is that you get the benefit of their industry knowledge at a fraction of the price of employing someone. For those who are initially tempted to try to do it themselves in-house, outsourcing to a reputable firm has the added advantage of having someone else to take away the worry about deadlines and tasks. Get help Whether you are a sole trader thinking about setting up a limited company, self employed and considering becoming a contractor, we can help. Our company secretarial services include: general advice on company law advice on changes in legislation and financial reporting requirements relating to you and your business tailored advice on company formation and structure preparation and filing of all statutory and other returns creation and maintenance of all documentation for minutes and resolutions. Contact us now to find out more about the role of the company secretary.

5 ACTIVE PRACTICE UPDATES FEBRUARY 2015 Minimising corporation tax A guide to the allowances and reliefs available to help minimise your corporation tax Business UPDATE Limited companies and most unincorporated associations such as sports clubs and cooperatives have to pay corporation tax. This is a tax levied against the profits a company makes. It includes profits from: trading investments income from renting out buildings or land selling assets for more than they cost. Companies based in the UK pay corporation tax on profits from both the UK and abroad. Foreign companies with a UK branch or office have to pay tax on the profits from their UK activities. Corporation tax rates The amount you have to pay depends on how much profit your company makes. At present there are 2 corporation tax rates: The small profits rate: companies with profits of less than 300,000 pay corporation at tax 20%. The main rate: companies that have a profit of more than 300,000 pay corporation tax at 21%. There is also a marginal rate of 21.25% for companies with profits of between 300,000 and 1.5 million. Companies that fall into this category will be taxed: 20% on the first 300,000 of profit 21.25% on the next 1.2 million 21% on anything above 1.5 million. From 1 April 2015 the small profits rate will be unified with the main rate into a single rate of 20%. Reduce your corporation tax bill There are various opportunities for businesses to reduce their corporation tax bill. Some of these are only available to different sized companies or specific industries. All businesses can deduct the costs of running the business from profits before tax. This includes salaries, office equipment and pension contributions. So it makes sense to keep careful records of expenditure throughout the year. Research and development (R&D) relief There are 2 schemes for claiming relief on R&D expenditure: SME Scheme: 225% on R&D costs. This means that for every 100 spent on R&D, corporation tax is reduced by 225. There are specific rules to determine if a business is an SME for R&D relief. Large Company Scheme: 130% on R&D costs. Projects that qualify for R&D relief must aim to improve knowledge or capability in science or technology by solving a scientific or technological uncertainty. They cannot just work on improving their own technology. The government has guidelines that define these terms within the context of R&D relief. Offices across the Midlands see our website for more details For more information, please call:

6 Minimising corporation tax The company will have to provide evidence of how the definition of R&D applies to a project in order to claim the relief. Costs that qualify for R&D relief: software revenue costs this is generally day-to-day running costs rather than capital expenditure on assets staff costs materials. But remember, you can only claim R&D relief if your business is liable for corporation tax. Patent box Companies that make a profit from exploiting patented inventions may be able to benefit from the patent box. The patent box allows a 10% rate of corporation tax on profits earned after 1 April To qualify for the reduction a company must: pay corporation tax make a profit using patented inventions own or exclusively license-in the patents have developed the patents. There are also rules on the types of patents that qualify and types of income from patents that qualify. Applying for patent box relief needs to be done within 2 years of the end of the accounting period in which the profits and income were earned. Creative industries relief Companies in the creative industries can claim a higher rate of corporate tax relief if they: pay corporation tax are directly involved in the production and development of certain films, television programmes, animation programmes or video games. In addition the film, TV programme or video game must pass a cultural test administered by the British Film Institute to qualify for the relief. Disincorporation relief Companies can claim relief on the transfer of assets to shareholders when they change from being a private limited company to a partnership owned business or a sole trader. Introduced in 2013, the relief will operate until Trading losses Trading losses can sometimes be offset against other profits to reduce the amount of corporation tax payable. For example, a company makes a loss from trading but makes a profit from renting out a building in the same accounting period. Trading losses can be carried back against profits in the previous accounting period or carried forward and offset against future profits. The rules in this area are very strict to prevent tax evasion so seek advice before making a decision. We can advise on which rates and allowances are available to your business. Contact us for more information. 10 points to consider 1. The deadline for paying corporation tax is 9 months and 1 day after the end of the accounting period. 2. The deadline for filing a corporation tax return is 12 months after the accounting period ends. 3. Companies with profits of more than 1.5 million pay their tax in quarterly instalments. 4. It s possible to file your annual accounts with Companies House and company tax return together using accounting software or HMRC s online corporation tax service if they cover the same period. 5. You can get more time to file your accounts if something beyond your control prevents you from sending your accounts and you contact Companies House before the filing deadline. 6. You can t pay corporation tax by post. Ways to pay include online, over the phone, by direct debit or in person at a bank, building society or post office. The time it takes for your tax to reach HMRC will depend on your payment method so take this into consideration when choosing how to pay. 7. Let HMRC know if you don t owe any corporation tax for an accounting period. Otherwise they will send payment reminders. 8. The corporation tax year runs from 1 April to 31 March rather than following the financial year. 9. Different rates of corporation tax may apply if your accounting period covers more than 1 corporation tax year. You will need to work out how many days each rate applied and then work out the tax due for each rate. 10. The thresholds reduce in line with your accounting period. For example, if your accounting period is 4 months, the small profits threshold is 100,000. Contact us if you need any further information or advice regarding corporation tax.