Business Compliance questions
18 direct answers, each with the short version first and a link to the full guide. For the whole topic, see Business Compliance.
What happens if you miss the Companies House filing deadline?
Companies House applies late filing penalties automatically, with no warning. For a private company, accounts filed up to one month late cost £150, rising to £1,500 beyond six months. Penalties double if you file late two years running, and continued failure to file can lead to your company being struck off.
Do you need to register with the ICO?
Most UK businesses that process personal data must register with the ICO and pay an annual data protection fee, starting at £40 for micro-organisations and rising to £60 or £2,900 for larger ones. Narrow exemptions exist — for example, processing only for staff administration or accounts — so check with the ICO self-assessment tool.
Is a cookie banner legally required on my website?
Yes, if your website sets any non-essential cookies — including analytics, advertising, or social media tracking cookies. PECR requires prior, informed consent before those cookies are set. Strictly necessary cookies, such as session cookies that make the site work, do not need consent, so a site using only those needs no banner.
Which pays less tax — a sole trader or a limited company?
At profits under roughly £30,000 a year, sole traders often pay the same or less overall once accounting fees are counted. At higher profits, a limited company can save significant tax by paying a small salary and taking dividends. Many businesses incorporate when profits consistently exceed £30,000–£50,000.
What happens if you employ someone without the right to work?
You can face a civil penalty of £45,000 per illegal worker for a first breach, rising to £60,000 for a repeat breach — increased from £20,000 in February 2024. If you knew or had reasonable cause to believe they lacked the right to work, you risk criminal prosecution, an unlimited fine, and up to five years in prison. Correct pre-employment checks give you a statutory excuse.
How long do you need to keep business records?
Limited companies must keep accounting records for at least 6 years from the end of the financial year they relate to. Sole traders must keep Self Assessment records for at least 5 years after the 31 January deadline. VAT records must be kept 6 years, and PAYE records 3 years — even after a business closes.
When do I have to register for VAT?
Once your taxable turnover passes £90,000 in any rolling 12-month period, or when you expect to pass it in the next 30 days alone. You then have 30 days to notify HMRC. It is a rolling test, checked at the end of every month — not a tax-year one.
How much corporation tax will my company pay?
Nineteen per cent on profits up to £50,000 and 25% above £250,000, with marginal relief tapering the effective rate in between. Payment is due nine months and one day after your accounting period ends; the CT600 return is a separate deadline twelve months after it.
What is the penalty for filing a Self Assessment return late?
One day late costs £100 automatically, even if you owe nothing. From three months, £10 a day runs for up to 90 days. At six and twelve months HMRC adds the greater of 5% of the tax or £300 each time — at least £1,600 for a return over a year late.
Do I have to put my staff into a workplace pension?
Yes. Anyone aged 22 to State Pension age earning over £10,000 a year must be enrolled automatically, from their first day. Minimum total contributions are 8% of qualifying earnings with at least 3% from you. Duties begin the day you take on your first member of staff.
When do I need to register for PAYE as an employer?
Before your first payday — ideally about four weeks ahead, because HMRC can take up to five working days to issue your references and you cannot submit payroll without them. After that you must file a Full Payment Submission on or before every payday under Real Time Information.
Do I need employers’ liability insurance?
Almost certainly, if you employ anyone at all. The Employers’ Liability (Compulsory Insurance) Act 1969 requires cover of at least £5 million from an FCA-authorised insurer, and the HSE can fine you up to £2,500 for every day you trade without it.
Can I challenge my client’s IR35 status determination?
Yes. Every end client must run a status disagreement process under section 61T ITEPA 2003 and respond within 45 days, either confirming the decision or issuing a revised Status Determination Statement. Blanket “inside IR35” decisions applied to all contractors are not lawful.
How long does a DBS check take?
Basic checks usually come back within 24 to 72 hours, standard checks in one to two weeks, and enhanced checks in two to eight weeks depending on the police force involved. The DBS Update Service, at £16 a year, lets an employer confirm an existing certificate online in minutes.
Do I have to pay business rates if I work from home?
Usually not. A laptop on the kitchen table changes nothing. Rates only bite where part of the home is used exclusively for business — a consulting room, a studio, a guest house — and even then Small Business Rate Relief means nothing to pay below a £12,000 rateable value.
Do I need a written health and safety policy?
Legally, only if you employ five or more people — but every employer must assess risks whatever their size, and those with five or more staff must write the significant findings down. Below five, a short written policy is still strongly recommended and the HSE provides free templates.
What do I need to do before hiring my first employee?
Five things before day one: a right to work check, PAYE registration with HMRC, employers’ liability insurance of at least £5 million, a written statement of particulars, and a qualifying pension scheme ready for auto-enrolment. Budget for employer National Insurance and pension contributions on top of salary.
When does Making Tax Digital start for sole traders?
From 6 April 2026 if your combined self-employment and property income is over £50,000, and from 6 April 2027 if it is over £30,000. Below £30,000 no start date has been set. Once in, you file four quarterly updates plus an end-of-period statement and final declaration.