Corporation Tax & Self Assessment Problems

[david19]

Hi all,

Sorry if I put this in the wrong forum (wasn't sure where to put it). I've been looking around the internet for a while now trying to find a simple answer that makes sense but the more I look, the more confused I become.

My question is about the tax I need to be paying as a Ltd company. I was previously registered as a sole trader, but set up as Ltd company last year with myself as the only director and sole shareholder. I have no other employees. And as far as I am aware, since I am now a Ltd company, I need only pay self assessment corporation tax (which I have done). But I recieved a £100 fine last week for a "late self assessment tax return". And the letter is addressed to me, not the company. Because it was addressed to me personally, my initial reaction was that HMRC had made a mistake and still had me down as a sole trader as well as a limited company (I changed my sole trader status last year when I went Ltd). But someone mentioned yesterday that I need to pay corporation tax on the company's profits, and then I still have to pay personal tax from what I have paid myself.

Please can someone help me to understand exactly what tax I need to be paying here? Any help would be very, very much appreciated.

Thank you,
David

[AJHenderson]

You will pay corporation tax on the company profits, and you will pay personal tax on your own income.

As your a company director its a legal requirement to complete a Self Assessment Return for yourself as well as the company.

[RAL]

Did you file your final self assessment as a sole trader? It seems that you did not file your Self Assessment Tax Return (SATR), hence you received penalty. If there is tax due then may be further interest and penalty will be levied. As you were self employed, you are on list of people who need to file SATR. Looks like you did not file your SATR. So that is the case you need to file as soon as possible. Also write your cessation date on SATR. As it is very late you would still get another SATR to do next year. However for current year 2009/2010 try and file ASAP (before Sep-10) then likely you would be taken off the list.

Another point, there is no legal requirement for director or anyone to file a tax return unless you are requested by HMRC. However, you have an obligation to inform HMRC if you have taxable income.

Just curious, how did you do your books for the company? How did you transfer assets and goodwill to company? Did you accounted correctly for goodwill, incorporation relief etc?

[mullet]

And as far as I am aware, since I am now a Ltd company

This is a common misunderstanding. You are an individual. The company is a "body corporate". There are two separate legal persons. Each have different responsibilities.

And Corporation Tax is not the only tax that a company might pay.