Companies have to pay tax on what they earn as their profit. Many clients ask the same question of the difference between yearly return and tax returns . These terms are confusing for the newbies. Many companies arrange workshops and training sessions for fresh recruits. All the recruits learn the basics, including tax-relevant issues. This article is going to show you the core difference between both terms.

After the limited company formation, the owner should submit all the documents related to the company’s information and operations to the Companies House. Companies House keep the factual data of the companies while HMRC collects the tax from the companies.

Annual Return

The annual return is a little confusing term for many people. It's necessary for startup owners in the UK to learn about the documentation procedures with the Companies House and HMRC. It's best to consult professional accountants before getting into the legal documentation.

>What is Annual Return?

The annual return is a document that includes all the information about your company. It has nothing to do with your company accounts or tax returns. You must file the statistics of your business to the Companies House at the end of every year. After June 2016, the annual return replaced by confirmation statement which is vital for every company to submit. Filing yearly return is not a lengthy task, and you can complete it from the help of low fee accountants in the UK.

>Time of filing Annual Return

Companies must submit the annual return before the companies anniversary. Your tax return date follows this confirmation statement.

>Purpose of Annual Return

By registering a confirmation statement, you acknowledge the Companies House that all the information about your company is accurate.

Tax Return

The tax return is the amount you pay to HMRC every year. It is the percentage that you owe to the government on your profits.

>What is Tax Return?

The tax return is different from the annual return. You register it to HMRC while the yearly return files to the Companies House. It’s a formal company incorporation tax return that you pay to HMRC even if your company has not started trading yet.

>How does it work?

You fill the form CT600 and attach all the required documents along, including the company’s statutory accounts , additional tax computation reports, and any specific material required by HMRC. Hire an accountant for a contractor to complete the task because any minor mistake can lead to harsh results.

> Time for filing Tax Return

A company has a year to calculate and file the tax return. Companies in the UK hire cheap accountants who handle the accounts and perform bookkeeping services for the company. After the year-end, the company has nine months and one day to file the tax return.