The thought of HMRC compliance may well be enough to make you curl up in a ball as a first time contractor. There’s so much to do that it’s easy to fall behind or get something wrong and be hit with fines (£100–£1,000) or even an HMRC enquiry. You want to be out there winning work and earning money, not picking up the pieces.
So what are the key things you need to stay on top of for HMRC?
Key compliance requirements as a contractor:
- Register your Ltd company (or self as a sole trader) for corporation tax at HMRC within 3 months of trading and keep up with your deadlines.
- Register for VAT if your turnover is more than £90,000. Voluntary registration can work in your favour, though, with a higher profit via the Flat Rate Scheme; read our VAT Guide for more information.
- If you pay yourself a salary, you need to run payroll monthly and make RTI submissions, with P60s and P11Ds at year end.
- Send accounts, a corporation tax return and a confirmation statement to Companies House annually.
FreeAgent software included in our Solo package from £109+VAT/month will automate your bookkeeping and expenses, and keep you on track with your accounts and tax. It tracks everything in real-time, so you’ll always know how much tax you’ve paid and what’s due and when. And that means no nasty “bill shock” moments!
Of course, there’s no harm in taking a look at the pitfalls first to make sure you know what’s coming:
Top compliance mistakes to avoid:
- Missing a VAT return or corporation tax return deadline will result in a fine of £100–£300.
- Claiming the wrong expenses, such as client entertainment, will set HMRC’s tax inspectors on high alert.
- Falling foul of IR35 is a big one and will result in having to pay back taxes.
How we make you compliant:
At Bright Ideas Accountancy, we take care of all the HMRC compliance stuff for you, including VAT returns, annual accounts, corporation tax returns, your confirmation statement to Companies House and payroll if you want it. Our accountants are dedicated to you, which means they respond to calls and emails the same day (calls made before 3pm, even faster!) and will never leave you wondering where you stand.
We can even be your HMRC agent, saving you even more time.
Contact us today for your free consultation to see how we can help keep you on top of compliance.
