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Limited company contractors and Corporation Tax

Published on Sep 15, 2009 |

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If you have set up as a limited company contractor, you will need to ensure that your new company is registered to pay Corporation Tax.

All limited companies, regardless of how long they have been trading, or how much money they have turned over, need to tell HMRC of their existence.

Once a new limited company has been formed at Companies House, HMRC should automatically be informed of its existence, and you should recieve a Corporation Tax "welcome pack" at the company's registered address.

In the first instance, you should complete Form CT41G (which contains details about the new company), and return it to HMRC.

If for some reason you don't receive this information automatically, you can download the forms from the HMRC website here.

Most contractors will hire a specialist accountant to deal with their tax and accounting affairs, so you should also complete a form with authorises your agent to act on your behalf (this should also be contained in your "welcome pack"). You can find out more about authorising your agent here.

All limited companies are also obliged to pay Corporation Tax on all company profits (currently at the 21% rate) within 9 months of the end of their annual accounting period. The Annual Corporation Tax Return must also be returned to HMRC within 12 months. Your contractor accountant should take care of these obligations, although ultimately you are responsible (as company director).

Even if you've purchased a company which you don't intend to use right away, you still need to inform HMRC of its existence. You should find an insert in Form CT41G which should be used for this purpose (see online version here.