In addition to the requirements for preparation and filing of financial statements, companies within the European Union countries and elsewhere must comply with the standards for completing their tax returns and filing them with the country’s controlling revenue authority.
For example, companies registered in England and Wales have to file a copy of their financial statements with Companies House, whereas their tax returns have to be filed with HMRC (Her Majesty Revenue and Customs).
In Hong Kong, by contrast, a tax return has to be filed with the HK Inland Revenue by absolutely all companies, whereas a copy of financial statements has to be filed with the Hong Kong Companies Registry only by a relatively small number of companies which meet specific criteria.
Statutory tax periods vary as well with each country, which may have its own standards regarding such a period.
For example, in Hong Kong a company may choose any date for its tax return provided that it is not more than 18 months from the date of its registration. According to the date chosen, a company is included in a particular category and has the following terms for filing of its tax return:
|Category||Date of return||Date of return filing|
|N||01 April – 30 November||Not later than 02 May|
|D||01 December – 31 December||Not later than 15 August|
|M||01 January – 31 March||Not later than 15 November|
In contrast to the above, in the United Kingdom the tax period for all United Kingdom Limited Liability Partnerships ends on a particular fixed date being 5th April of each year.
The systems of assessment of penalties for late filing of tax returns also vary. Each country may have its own procedure and amounts of penalties. For example, in the United Kingdom, unless a tax return is filed by the relevant deadline, the penalty is assessed as follows:
- GBP 100 on the following day after the specified due date
- GBP 10 per further day of delay up to a maximum of 90 days or GBP 900
- GBP 300 or 5% of the payable tax amount, whichever is higher.
Therefore a penalty of at least GBP 1,300 is applicable to a United Kingdom company that delays the filing of its tax return by three months.
Most countries currently encourage filing of tax returns electronically in practice. A longer filing period is generally set for electronic tax returns compared to paper copy returns. As an example, a tax return of a United Kingdom Limited Liability Partnership has to be filed by not later than 30th November if executed in paper copy form, whereas a further two months are granted for filing the return electronically extending the deadline to 31st January.
Lexon Incorporations will ensure that tax returns of the serviced companies are filed in accordance with the requirements of the country where the particular company is incorporated.