Late filing penalties
The level of late filing penalties at Companies House were increased for periods beginning on or after 6 April 2008 to coincide with the introduction of parts of the Companies Act 2006. In addition to increasing the flat rate penalties, where a company fails to file accounts on time for two years in a row (and the earlier began on or after 6 April 2008) the level of penalty is doubled. For example, a private company which files its accounts more than three months late for two consecutive financial periods will incur a penalty of £750 in relation to the second year. In order to avoid these costs it is important to ensure that accounts are filed within the required timescale of nine months from the end of the accounting period for private companies and six months for public companies.
Changes in tax rates and deferred tax
From 1 April 2011 the main rate of corporation tax changed from 28% to 26% with a further three 1% annual reductions starting on 1 April 2012 culminating in a rate of 23% in the tax year commencing 1 April 2014. The change in rates will impact the deferred tax calculations of companies reporting under UK GAAP and IFRS as changes in tax law are not reflected in the balance sheet/statement of financial position until the law has been substantively enacted at the relevant financial reporting period-end date.
The date of substantive enactment is either the date the Bill has been passed by the House of Commons and is awaiting passage through the House of Lords and Royal Assent, or the date a resolution has been passed under the Provisional Collection of Taxes Act 1968. As of 5 July 2011, only the changes to the main rate of tax to 26% and the reduction to 25% from 1 April 2012 had been substantively enacted. This means that an entity with a 31 August 2011 year end would base its deferred tax liability on a rate of 26% for the seven months to 31 March 2012 and then on 25% thereafter
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