First year accounts - two very different quotes

[Pale Ale]

Just wanted to sense check a quote I have had from an accountant for the first years accounts for my limited company.

The company was incorporated on 26th February 2018. Based on this the accountant has said that there will be a need to prepare:

• A full set of accounts including balance sheet for period ending 28th February 2019
• Production of two Corporation Tax computations and Corporation Tax Returns required
• To submit these to HM Revenue and Customs using the required software and advising you of the tax payable
• To producing small abbreviated accounts for filing with Companies House and submitting these direct to Companies House on behalf of the company by the due date

Total for the above £750. The accountant works from their house so we're not talking about a big firm which makes me a bit wary. Are first year accounts usually more expensive? This figure does not include a self assessment tax return or use of any tools etc.

I had a quote from one of the major online accountants and they were asking for £400 + VAT. No mention of two sets of corporation tax accounts, which I am pretty confused about.

Could someone explain in laymans terms why two corporation tax returns are necessary in the first year? Would the firm have allowed for this or should I confirm it with them?

Thanks in advance for any advice

[northernladuk]

Sod that. Get yourself a contractor specialist with Freeagent. Might cost a bit more overall but you've got a leading bookkeeping tool and an accountant on tap whenever you want.

[Maslins]

Cos Hse will always default for your company's year end to be 12 months from the end of the month your company was incorporated. Eg incorporate a company today, 13 Mar 2019, and first year end would be 31 Mar 2020. This means your first "year" is actually ~12 & 1/2 months. CT returns can only cover a period of 12 months maximum. Hence two CT returns may be required.

Accountants often get around this (generally no tax gain/loss, just makes admin easier) by saying your company was dormant for the first few days/weeks. Eg we'd suggest the company didn't trade from 13 Mar 19 - 31 Mar 19. Then it started to trade 1 Apr 19, for one whole year to their year end of 31 Mar 2020. Nice and tidy, only one CT return required (as one not required for the dormant period).

I would guess the major online accountant is anticipating you'll be with them longer term, on some kind of pay monthly deal? Therefore the £400 is a one off "catch up" type fee. Ie perhaps they wouldn't be up for it if you just wanted this as a one off task then you disappeared into the sunset. I may be wrong.

[Pale Ale]

Maslins - thanks for that.

As a matter of fact the company was actually dormant (I think) until the end of March.

So should I just let them know this and they will do the necessary?

I would guess the major online accountant is anticipating you'll be with them longer term, on some kind of pay monthly deal? Therefore the £400 is a one off "catch up" type fee. Ie perhaps they wouldn't be up for it if you just wanted this as a one off task then you disappeared into the sunset. I may be wrong.

Yes indeed, I've said that I will take up their monthly service after these accounts are out the way.

[Maslins]

As a matter of fact the company was actually dormant (I think) until the end of March.

So should I just let them know this and they will do the necessary?

I wouldn't worry about it. You could mention a trading start date for your company which may prompt them to just do one set where otherwise they might have done two...or they might've just done one anyway.