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Limited Company Formation Edinburgh
Limited company Edinburgh - Corporation Tax
You must pay Corporation Tax on profits from doing business as:
• a limited company
• any foreign company with a UK branch or office
• a club, co-operative or other unincorporated association, eg a community group or sports club
You don’t get a bill for Corporation Tax. There are specific things you must do to work out, pay and report your tax.
1. Register for Corporation Tax when you start doing business or restart a dormant business.
2. Keep accounting records and prepare a Company Tax Return to work out how much Corporation Tax to pay.
3. Pay Corporation Tax or report if you have nothing to pay by your deadline - this is usually 9 months and 1 day after the end of your ‘accounting period’.
4. File your Company Tax Return by your deadline - this is usually 12 months after the end of your accounting period.
Your accounting period is normally the same 12 months as the financial year covered by your annual accounts.
Profits you pay corporation tax on Limited Company in UK
Taxable profits for Corporation Tax include the money your limited company or association makes from:
o doing business (‘trading profits’)
o selling assets for more than they cost (‘chargeable gains’)
If your company is based in the UK, it pays Corporation Tax on all its profits from the UK and abroad.
If your company isn’t based in the UK but has an office or branch here, it only pays Corporation Tax on profits from its UK activities.
Appointing directors for a Limited Company UK
Must a company have directors, and if so, how many?
Every limited company in the UK must have at least one director. If a limited company has only one director, he or she must be a human person - not another company. A public limited company (or “plc”) must have at least two directors.
Who appoints directors and what is the process?
Most commonly, directors are appointed by the shareholders at the Annual General Meeting (AGM), or in extreme circumstances, at an Extraordinary General Meeting (EGM). A resolution for the appointment is put to a vote, and passed if a majority of shares are voted in favour.
When a vacancy arises unexpectedly, the remaining directors may appoint a new director temporarily. His appointment must be confirmed by the shareholders in general meeting as soon as possible. This would be appropriate for example, on the death of a director who represented an institutional lender-shareholder.
The shareholders, or an appointed committee of them, may delegate the power to appoint a new director to the existing directors.
The process for appointing new directors is usually recorded in the company's articles of association. It is not the same in all companies. The number of directors may be limited by the articles of association, so that a new director may be appointed only if a vacancy arises.
The company must notify Companies House within 14 days after a new director is appointed. The easiest way to do this is to use the CH WebFiling service. Alternatively, form AP01 or AP02 could be used.
Removing directors for a limited company UK
A director holds office at the wish of the shareholders. He can be removed by a 50% vote at a meeting of the shareholders. The meeting need give no reason. A single majority shareholder automatically carries over 50% so he alone can remove a director.
This right cannot be taken from them by anything contained in the director's service contract or in the Articles of Association. However, if a removal is in breach of the director’s service contract, or the terms of a shareholders’ agreement, he will have a right to damages if he chooses to go to court.
Common reasons are:
• disqualification under the law
• mental disorder under the Mental Health Act 1983
• breach of his service contract
• his resignation from office or
• absence from a board meeting for a consecutive period of six months
A director of limited company UK may be removed from office in one of the following ways:
Removal by ordinary resolution
Any member wanting to propose a resolution to remove a director must give the company 'special notice', (a formal notice setting out his request) at the registered office of the company at least 28 days before a general meeting. The directors may try to frustrate the members' intention by not calling a general meeting at all.
In this situation, a member who owns at least 10% of the voting shares in the company can request an extraordinary general meeting at which the proposal is put to the vote.
Whenever the company receives special notice of a resolution to remove a director, the board must ensure that the director concerned is informed immediately. That director has the right to make written representations to the members. He may also speak at the meeting.
Retirement by rotation
At each annual general meeting of the company, one-third of the total number of directors must retire from office and be subject to re-election. Shareholders can remove a director from the board simply by failing to re-elect him. Executive directors, however, are exempt from this requirement.
Disqualification by the court
The Court has power to disqualify a person from holding the office of director. It can also remove the disqualification.
Usually, to be disqualified by the Court, a director of a limited company in the UK must be shown to be incompetent to hold the post. Examples are: conviction for an offence related to running a company; or persistent failure to comply with rules for filing documents at Companies House.
Under the company's articles of association
A company's memorandum and articles of association can also specify circumstances when a director may be disqualified. This is unusual and it is not recommended that articles be edited to make any such provision. It is easy to remove a director without reference to the articles.
Process to be followed when someone stops being a director of a Limited Company UK
The remaining directors must notify Companies House within 14 days of the removal, retirement or resignation of a director. Form TM01 could be used, or the CH WebFiling service.
There may be a procedural requirement in the company articles of association too.
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