UK accounting and tax service
Many clients engage Tetra Consultants to undertake accounting and tax obligations of their UK businesses. Tetra Consultants will timely complete your firm’s financial statements, corporate tax returns and managing auditors on your behalf and without the need to travel. It is important to ensure your UK company is compliant with all local regulations. Failure to comply will result in late penalties issued by HM Revenue & Customs.
It is important for our international clients to understand their personal and corporate tax obligations. By outsourcing accounting and tax obligations to Tetra Consultants, our international clients can reduce overhead costs while being ensured of timely reporting and filings. Our accounting team will explain to our clients all required deadlines and expectations before the start of the engagement. Thereafter, our team will prepare the required fillings in advance to ensure we meet all stipulated deadlines. Tetra Consultants will send a weekly or bi-weekly update to our clients, ensuring all parties are aware of upcoming deadlines.
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Who is the regulating body of the tax regime in the UK?
- Her Majesty’s Revenue & Customs (HMRC) is the main authority responsible for enforcing taxes in the UK. However, certain taxes (including land transaction taxes) are dealt with separately so far as they apply in Scotland and Wales. Revenue Scotland is responsible for enforcing these taxes in Scotland and the Welsh Revenue Authority is responsible for enforcing these taxes in Wales.
Corporate Tax
- A UK company is subject to UK corporation tax on its income profits and capital profits. The standard corporate tax rate in UK is 19%, which is one of the lowest in Europe.
- This rate is due to be increased to 24% in April 2023 for companies with profits above £50,000. Marginal relief will be available for companies with profits between £50,000 and £250,000.
- Corporation tax is paid nine months after the end of the accounting period or, for companies with profits of more than £1.5 million, in four equal installments, due in the seventh and tenth months of the current accounting period and the first and fourth months after the end of the accounting period.
- Companies with annual taxable profits of £20m or more are required to make payments in the third, sixth, ninth, and twelfth months of their accounting period. Where a company is a member of a group, the threshold will be divided by the number of companies in the group.
- For tax purposes, trading profits are calculated by deducting certain reliefs/allowances together with any expenses incurred wholly and exclusively for the purposes of the trade from the sum of all trading receipts.
- The UK tax system can impose numerous penalties for failing to adhere to the self-assessment system. These include penalties for late filing of returns, failing to maintain appropriate records, submitting an incorrect return, making errors in certain documents sent to HMRC, unreasonably failing to report errors in assessments by HMRC, and failing to respond to a formal notice of information requested from the tax authorities within the specified time limit.
Special corporate tax regime
Businesses operating in four specific sectors in the UK can avail themselves of special corporation tax regimes:
- Oil and gas companies
- Life insurance companies
- Tonnage Tax regime
- Banking sector
Besides the four sectors listed above, there are no special UK corporate tax rates for particular types or sizes of business activity. By and large, all companies in every sector are subject to the same corporation tax rates and rules. However, it is worth bearing in mind that several reliefs, research & development credits, and anti-avoidance rules might apply, depending on the size of the corporation.
Value Added Tax (VAT)
- Value-added tax (VAT) is payable on the supply of most goods and services in the UK by a taxable person (a person who is registered, or should be registered, for VAT purposes). The standard VAT rate in the UK is 20% and it is mandatory to register VAT with HM Revenue & Customs if your business’ value of VAT taxable turnover exceeds £85,000.
- Certain supplies are exempt from VAT, the most important of which relate to finance, insurance, education, health, and some supplies of land. A business that has made taxable supplies in excess of £85,000 in the last 12 months, or anticipates making taxable supplies in excess of £85,000 in the next 30 days, is required to register for VAT and account to HM Revenue & Customs for it.
- A business that is registered for VAT must charge VAT on taxable supplies made by it (‘output tax’) but can recover the VAT charged on supplies made to it (‘input tax’) to the extent that the VAT was incurred for the purposes of making taxable supplies. VAT will, however, be a real cost for businesses that are making exempt supplies.
- VAT returns are required to be completed periodically. For smaller companies, the standard preset interval is one year. On the other hand, larger companies are required to file monthly VAT returns.
Other tax considerations
The UK corporation tax regime has a number of pieces of anti-avoidance legislation. The main ones are set out below.
GAAR (General Anti Abuse Rule)
- The GAAR took effect from 17 March 2013 and was strengthened in the Finance Act 2016.
- Its purpose is to deter taxpayers from entering into abusive arrangements and deter would-be promoters from promoting them. If an arrangement is not regarded as abusive it cannot fall within the GAAR. Although potentially quite wide-reaching to date the GAAR has not been applied.
TAARs (Targeted Anti Avoidance rules)
- As well to the GAAR the UK corporate tax regime includes a number of TAARs.
- These are introduced as and when HM Revenue & Customs becomes aware of specific deemed abuses. These numerous, and in many cases highly specific, and so are not set out here.
DTAAs (Double Taxation Avoidance Agreements)
- UK has signed Double Tax Avoidance Agreements (DTAAs) with more than 130 countries, including China, Singapore, India, and the United States of America.
- It is mandatory to submit annual accounts to UK Companies House and company tax returns to HM Revenue & Customs.
- In UK, there is no withholding tax on dividends. However, interest and royalties are subject to a withholding tax of 20% in the absence of the Double Taxation Avoidance Agreement.
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