Dear fj-ga
There are three main financial regulations that apply broadly to
business operations in the UK. Requirements under the Companies Acts
to keep accounts and submit annual returns; registration with the
Customs and Excise for Value Added Tax, and registration with the
Inland Revenue for Corporation Tax. The latter both have power to
investigate and prosecute offences. Offences under the Companies Act
are normally dealt with by the Department of Trade and Industry ‘DTI’.
Businesses in the Financial Service Sector are also regulated by the
Financial Services Authority ‘FSA’ for the protection of consumers and
prevention of money laundering.
The internal proceedures required mainly relate to the records being
kept and these are detailed below.
The vast majority of businesses in the UK are limited liability
companies. The main legislation dealing with their regulation is under
the Companies Act 1985 as amended by the Companies Act 1989.
http://www.formations365.co.uk/companies_act_1989/sections.shtml
Section 221 requires companies to keep accounting records.
"221. (1) Every company shall keep accounting records which are
sufficient to show and explain the company's transactions and are such
as to
(a) disclose with reasonable accuracy, at any time, the financial
position of the company at that time, and
(b) enable the directors to ensure that any balance sheet and profit
and loss account prepared under this Part complies with the
requirements of this Act.
(2) The accounting records shall in particular contain
(a) entries from day to day of all sums of money received and expended
by the company, and the matters in respect of which the receipt and
expenditure takes place, and
(b) a record of the assets and liabilities of the company.
(3) If the company's business involves dealing in goods, the
accounting records shall contain
(a) statements of stock held by the company at the end of each
financial year of the company,
(b) all statements of stocktakings from which any such statement of
stock as is mentioned in paragraph (a) has been or is to be prepared,
and
(c) except in the case of goods sold by way of ordinary retail trade,
statements of all goods sold and purchased, showing the goods and the
buyers and sellers in sufficient detail to enable all these to be
identified."
http://www.formations365.co.uk/companies_act_1989/1-12.shtml#mdiv2
Section 226 requires a that an annual financial statement be prepared.
"226. (1) The directors of every company shall prepare for each
financial year of the company
(a) a balance sheet as at the last day of the year, and
(b) a profit and loss account.
Those accounts are referred to in this Part as the company's
"individual accounts".
(2) The balance sheet shall give a true and fair view of the state of
affairs of the company as at the end of the financial year; and the
profit and loss account shall give a true and fair view of the profit
or loss of the company for the financial year."
http://www.formations365.co.uk/companies_act_1989/1-12.shtml#mdiv4
Section 363 Companies Act 1989 requires that an annual return be
submitted to Companies House.
http://www.formations365.co.uk/companies_act_1989/128-145.shtml#mdiv139
Generally, Annual Returns are in this format but there many exemptions
and depending on size of the company. Accounts include:
a profit and loss account (or income and expenditure account if the
company is not trading for profit);
a balance sheet signed by a director;
an auditors' report signed by the auditor (if appropriate);
a directors' report signed by a director or the secretary of the
company;
notes to the accounts; and
group accounts (if appropriate).
Companies House has a substantial guide to the requirements which you
may wish to read.
http://ws1.companies-house.gov.uk/notes/gba3.html
Inland Revenue.
The Inland Revenue require records to be kept to enable a Company Tax
Return to be submitted and Corporation Tax to be calculated.
Corporation Tax was introduced in the Finance Act 1965 and seems to
have been tampered with every year in the Chancellor’s Budget
"The precise records your company needs to keep will depend on the
size of its business but they must be adequate to enable your company
to send in a correct Company Tax Return.
These records must be kept for six years from the end of the
accounting period. If, at the six-year point, a return is under
enquiry, then this period is extended to the end of the enquiry.
Records to be kept include records of all receipts and expenses and,
for companies with trades involving dealing with goods, records of
sales and purchases"
"Your company or organisation has any taxable income or profits, you
must tell us that your company exists and that it is liable to tax.
You have to do this within 12 months of the end of your accounting
period. If you do not, your company may be liable to a penalty."
"Your company must also
keep and retain records;
work out and pay its tax without us asking your company to pay;
send its Company Tax Return to us within a set period."
There are more details on a general guide to Corporation Tax Self
Assessment at
http://www.inlandrevenue.gov.uk/pdfs/ctsabk4.htm#f
Customs and Excise – Imposition of Value Added Tax.
Introduced in Value Added Tax Act 1994.
"Registration for VAT is compulsory in certain situations, but also
available on a voluntary basis subject to specific criteria. The rules
for both are summarised below.
You MUST register for VAT when:
The value of your taxable supplies exceeds the registration threshold
If the value of your taxable supplies in the past 12 months or less
has exceeded the current VAT registration threshold of £56,000, or the
value of your taxable supplies in the next 30 days alone is expected
to exceed this threshold, you should read the publication below and
complete the application form."
http://www.hmce.gov.uk/business/vat/vatregist.htm
There is additional information at
http://www.liaison-vat.co.uk/vatinfo/faq_general.html
Financial Services Authority.
Under the new Financial Services and Markets Act 2000 the Financial
Services Authority regulates the finance sector. These financial
institutions are required to appoint a Money Laundering Reporting
Officer and put in place systems and staff training to ensure
suspicious transactions are identified and reported.
http://www.fsa.gov.uk/fsma/data/fsma/act/act_index.htm
I believe I have covered the requirements of your question. If it does
not, or the answer is unclear, then please ask for clarification of
this research before rating the answer. I shall respond to the
clarification request as soon as I receive it.
Thank you,
answerfinder
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