Financial Reporting, Tax, and Audit of Companies, LLPs, and LPs in the UK

Maintaining accounting records and preparing financial and tax returns is a crucial part of the administration of UK businesses. This article outlines the reporting, tax, and audit obligations for private limited companies, Limited Liability Partnerships (LLPs), and Limited Partnerships (LPs) in the UK, focusing on their interactions with Companies House and HM Revenue & Customs (HMRC).

Private Limited Companies

UK private limited companies are required to:

1.     Submit an annual Confirmation Statement and notify Companies House of changes;

2.     Keep proper accounting records;

3.     Prepare and submit financial statements annually;

4.     Conduct an audit where required by law;

5.     File tax returns and pay taxes.

Annual Confirmation Statement

Companies must submit a Confirmation Statement (Form CS01) to Companies House within 14 days of the end of the review period. The review period is a 12-month period starting from the date of incorporation or the anniversary of the last Confirmation Statement. This confirms details such as directors, shareholders, registered office, and persons with significant control (PSCs).

Changes to industry codes (SICs), share capital, or shareholder information can be included with Form CS01, while other changes (e.g., registered office or PSC details) require separate forms filed within 14 days of the change. The filing fee is £13 (online) or £40 (paper) as of 2025.

Accounting

Under section 386 of the Companies Act 2006, companies must keep proper accounting records that:

·        Show and explain transactions;

·        Disclose the financial position with reasonable accuracy;

·        Enable preparation of financial statements in accordance with statutory requirements.

Records must include details of monies received and expended, with justification, and the company’s assets and liabilities. They must be kept at the registered office or another designated place and be available for inspection by company officers. If records are kept outside the UK, accounts and returns must be sent to the UK for inspection.

Records must be retained for at least six years from creation, per section 388(4) and HMRC requirements.

Failure to comply is an offence, with fines and, in cases of fraudulent failure, imprisonment of up to seven years under section 387.

Financial Statements

A company’s financial year aligns with its accounting reference period, starting on incorporation and ending on the last day of the month of the first anniversary (the accounting reference date, or ARD). Subsequent periods are 12 months, ending on the ARD. For example, a company incorporated on 7 September 2020 has a first period ending 30 September 2021, with the next period from 1 October 2021 to 30 September 2022.

The ARD can be changed using Form AA01. Extensions are limited to 18 months once every five years (unless in administration), with no restrictions on shortening.

Financial statements must:

·        Comply with UK GAAP or IFRS;

·        Give a true and fair view of assets, liabilities, financial position, and profit or loss.

Small companies submit a balance sheet and income statement. Micro-entities submit a condensed balance sheet. Thresholds (per The Companies Act 2006 (Amendment of Part 7) Regulations 2023) are:

·        Small company: Turnover ≤ £12.6 million, balance sheet total ≤ £6.3 million, employees ≤ 50.

·        Micro-entity: Turnover ≤ £700,000, balance sheet total ≤ £350,000, employees ≤ 10.

Dormant companies (no significant accounting transactions, excluding permitted transactions like share subscriptions or filing fees) file simplified “dormant accounts” using Form AA02. Deadlines and penalties are the same as for standard accounts.

Directors are responsible for preparing and approving financial statements, which must be sent to shareholders, debt instrument holders, and those entitled to notice of general meetings.

Under section 441, statements must be filed with Companies House within 9 months of the ARD for private companies (6 months for public companies). For first periods exceeding 12 months, filing is due within 21 months from incorporation or 3 months from the ARD, whichever is later.

Extensions may be requested from Companies House for unforeseen circumstances. Late filing incurs fines up to £5,000 for directors, with daily penalties of up to £500 for ongoing delays. Civil penalties (2025) are:

·        Up to 1 month: £150;

·        1–3 months: £375;

·        3–6 months: £750;

·        Over 6 months: £1,500.

Failure to file may lead to the company being struck off and dissolved, with assets becoming state property.

Audit

Financial statements require an audit unless exempt. Small companies, micro-entities, and dormant companies are typically exempt if they meet small company criteria and have no significant accounting transactions (excluding permitted ones).

Taxes and Company Tax Returns

Corporation Tax

A company is UK resident for tax purposes if incorporated in the UK or centrally managed and controlled there. The corporation tax rate is 19% (as of 2025, pending Budget changes). UK-resident companies pay tax on worldwide income, with relief for foreign taxes. Non-residents pay tax only on UK-sourced income.

The tax base includes business income and capital gains, with deductions for ordinary expenses. Dividends received are generally tax-exempt, and dividends paid have no withholding tax. Interest and royalties paid abroad face 20% withholding tax, unless reduced by double tax treaties.

Companies are automatically registered for corporation tax upon incorporation, receiving a Unique Taxpayer Reference (UTR). A tax return is filed within 12 months of the tax period’s end, even if no profits are made. For profits ≤ £1.5 million, tax is due 9 months and 1 day after the tax period. First periods exceeding 12 months may require two tax returns.

Value Added Tax (VAT)

The standard VAT rate is 20%, with reduced rates of 5% or 0% for specific goods and services. Registration is mandatory if taxable turnover exceeds £90,000 in the past 12 months or is expected to exceed this in the next 30 days. Voluntary registration is permitted. VAT-registered companies file VAT Returns quarterly.

Payroll Taxes

Companies with employees must register as employers and withhold Pay As You Earn (PAYE) income tax and National Insurance Contributions (NICs).

Limited Liability Partnerships (LLPs)

LLPs combine features of companies and traditional partnerships, with similar reporting obligations.

LLP Reporting

Annual Confirmation Statement

LLPs submit a Confirmation Statement (Form LL CS01) within 14 days of the end of the review period (12 months from incorporation or the last Confirmation Statement). It confirms members, their details, registered office, and PSCs. Changes require separate forms within 14 days. The filing fee is £13 (online) or £40 (paper).

LLP Accounting

Under section 386 (as applied by The Limited Liability Partnerships (Accounts and Audit) (Application of Companies Act 2006) Regulations 2008), LLPs must keep records showing transactions, financial position, and enabling statutory financial statements. Records are kept at the registered office or a designated place, available for member inspection, and retained for at least six years.

Failure to comply incurs fines and, in fraudulent cases, up to seven years imprisonment.

LLP Financial Statements

Designated members prepare and file financial statements with Companies House within 9 months of the ARD for periods of 12 months or less, or 21 months from incorporation or 3 months from the ARD (whichever is later) for first periods over 12 months. The ARD can be changed using Form LL AA01, with extensions limited to 18 months once every five years.

Statements comply with UK GAAP or IFRS, giving a true and fair view. Small LLPs (turnover ≤ £12.6 million, balance sheet total ≤ £6.3 million, employees ≤ 50) submit a balance sheet, income statement, and notes.

Late filing incurs penalties:

·        Up to 1 month: £150;

·        1–3 months: £375;

·        3–6 months: £750;

·        Over 6 months: £1,500.

Fines for directors can reach £5,000, with daily penalties of £500 for ongoing delays.

Audit of LLPs

Small LLPs are exempt from audits if they meet small company criteria and have no significant transactions.

Taxation of LLPs

Corporation Tax

LLPs are tax-transparent, with profits taxed at the member level via Self-Assessment Tax Returns, regardless of residency. If all profits are non-UK sourced and all members are non-UK residents, no UK tax applies. LLPs cannot benefit from UK double tax treaties.

The LLP files a Partnership Tax Return (Form SA800) within 12 months of the tax period’s end (tax year: 6 April to 5 April). Deadlines are 31 October (paper) or 31 January (online) for the following year (e.g., tax year 6 April 2024–5 April 2025: 31 October 2025 or 31 January 2026).

Value Added Tax (VAT)

LLPs are treated as single taxable entities. Registration is mandatory if taxable turnover exceeds £90,000 in the past 12 months or is expected to exceed this in the next 30 days. The standard VAT rate is 20%, with reduced rates of 5% or 0%. VAT-registered LLPs file VAT Returns quarterly.

Payroll Taxes

LLPs with employees withhold PAYE and NICs.

Limited Partnerships (LPs)

LPs are governed by the Limited Partnerships Act 1907.

LP Reporting

Partnership Details

LPs notify Companies House of changes in name, principal place of business, partners, business type, or limited partner contributions. Scottish LPs (and certain Private Fund Limited Partnerships) report PSCs.

LP Financial Statements

LPs must keep accounting records under section 386 (as applied by The Partnerships (Accounts) Regulations 2008). Filing is required only for qualifying partnerships, where all members (or general partners for LPs) are limited companies or equivalent entities. Qualifying LPs prepare statements as if they were companies, filed within 9 months of the financial year’s end. UK limited company general partners attach LP statements to their own filings.

Non-qualifying LPs (e.g., with non-UK resident general partners) are exempt from filing. Non-compliance incurs fines up to £5,000 per general partner, with daily penalties.

Taxation of LPs

LPs are tax-transparent, with profits taxed at the partner level based on their tax residence. Non-UK resident partners with no UK-sourced income face no UK tax. LPs cannot use UK double tax treaties. Partners file Self-Assessment Tax Returns, and the general partner files a Partnership Tax Return (Form SA800) within 12 months of the tax period’s end (deadlines: 31 October for paper, 31 January for online).

Value Added Tax (VAT)

LPs are single taxable entities for VAT. Registration is mandatory if taxable turnover exceeds £90,000 in the past 12 months or is expected to exceed this in the next 30 days. VAT-registered LPs file VAT Returns quarterly.

Payroll Taxes

LPs with employees withhold PAYE and NICs.