How to file clients’ Final Accounts and Corporation Tax returns through FreeAgent
This article explains how you can use FreeAgent to file your limited company clients’ Final Accounts (FRS 105 micro-entity) reports with Companies House and their Corporation Tax (CT600) returns with HMRC.
Important note: while small business owners who do not use FreeAgent with an accountant will have full access to this functionality, your clients will not have full access to it. If they hold the user role of ‘Director’ in FreeAgent and have either full (level 8) or level 7 access to their account, they will be able to approve and sign their End of Year report but they won’t be able to file Final Accounts to Companies House or their Corporation Tax return to HMRC. As the accountant, you will complete the filing process.
You will have full access to the features described in this article if you hold the user role of ‘Senior Account Manager’ in your practice’s FreeAgent account. Please note that you must be authorised by HMRC to file Corporation Tax online for the client in question. You will need the following information to hand:
- your Companies House presenter account details
- the client’s company authentication code
- your Government Gateway user ID and password
FreeAgent can only produce CT600 forms and allow you to file Corporation Tax returns on behalf of your clients for accounting years ending on or after 27th October 2020. If a client’s accounting period ends before this date, FreeAgent will work out a Corporation Tax projection for you, which you can use when you file their Corporation Tax return directly to HMRC.
Unfortunately, FreeAgent is unable to calculate a company’s Corporation Tax liability accurately in any of the following scenarios:
- The company is carrying trading losses backwards
- The company has trading losses prior to 1st April 2017
- The company has received dividends from other companies
- The company has made a profit or loss from buying or selling investments
- The company needs to file for the final period to cessation
- The company needs to record research and development activity
- The company has asset disposals with chargeable gains due
If your client’s company has donated money to a charity, FreeAgent will calculate its overall tax correctly but will not split the donation out into box 305 on the Corporation Tax return so the content of the CT600 form will be incorrect.
If any of these scenarios applies to your client’s company, unfortunately you won’t be able to use FreeAgent to file their company’s Corporation Tax return to HMRC. Find out more about the unsupported scenarios.
In addition, FreeAgent does not currently support Accounts and CT600 filing for companies that are limited by guarantee.
Before you file
There are a few tasks you need to complete in a limited company client’s FreeAgent account before you can use this feature at the company’s accounting year end:
2. Add a note in FreeAgent to record the average number of employees that the company had over the course of the accounting year, and any other required notes. To fill these in, having switched to the client’s FreeAgent account, navigate to ‘Accounting’ from the menu at the top of the screen, select ‘Reports’ from the drop-down menu and then choose ‘Final Accounts.’ Select the relevant year from the list and then choose ‘Manage notes and settings’ in the top-right of the ‘Final Accounts report’ area. Enter the required information and select ‘Save changes’ to complete the process.
3. If your client started using FreeAgent from their company’s second year (or any subsequent year) of trading, you should also enter the previous year’s values in the ‘Manage notes and settings’ area. FreeAgent will then add these figures to the Final Accounts report. Please note that FreeAgent won’t copy these figures over from the opening balances and it won’t copy the figures to the opening balances area. This is because they are two sets of figures that may be for different time periods.
4. Ensure that the CT600A supplementary page is included as part of your client’s Corporation Tax submission if they need to report any year-end debit balances on their loan accounts to HMRC and that a ‘Director Advances Credits Note’ has been added to your client’s Final Accounts report with details of the loan.
5. Make sure that your client’s Corporation Tax return submission is set as the first one for the period that you're working on. You can check this by selecting ‘Edit Details’ in the top right corner of the Corporation Tax return and making sure the ‘Are you making an amendment’ option is set to ‘no’.
6. Finally, you should check that the client’s Corporation Tax reference number is recorded correctly in FreeAgent. To do this, navigate to the ‘Settings’ drop-down menu in the top-right corner of the client’s account and choose ‘Company Details’. If the Corporation Tax reference number is incorrect, amend the information in the text box and select ‘Save Changes’ to complete the process.
When you’re ready to begin the process of filing the client’s Final Accounts and Corporation Tax return through FreeAgent, follow the steps outlined below:
1. Switch to the client’s account
Log in to your Practice Dashboard and select the ‘My Clients’ tab in the ‘Clients’ area. Find the relevant client from the list and choose ‘Switch to’ at the right-hand side of the listing.
2. Review the client’s End of Year report and enable approval
Navigate to the ‘Accounting’ tab at the top of the screen and select ‘End of Year’ from the drop-down menu.
On this page, you will be able to view the client’s End of Year report, which comprises a set of full accounts, abbreviated accounts (this is the copy which will be submitted to Companies House) and the CT600 form by default. These documents are populated automatically by FreeAgent based on the data that you and your client enter throughout the year.
You can adjust this information by navigating to ‘Settings’ from the drop-down menu at the top-right of your Practice Dashboard and choosing ‘End of Year’. From there, you can choose whether the client’s abbreviated accounts or CT600 form should be included in your view of the client’s ‘End of Year’ area. You can also choose whether the accountant’s report, which is not included by default, should be included in the client’s full accounts, and add text for it if you want to include it.
3. Enable approvals
Before you can submit the client’s Final Accounts to Companies House and Corporation Tax return to HMRC, you will need to enable approvals in their account.
You’ll see the option to ‘Enable approvals’ in the top-right of the ‘End of Year’ area in the client’s FreeAgent account. To access this area, navigate to ‘Accounting’ at the top of the screen and select ‘End of Year’ from the drop-down menu.
At this stage, FreeAgent automatically puts a lock on the client’s account to prevent any further changes being made to the End of Year figures. However you can remove this lock at any time by selecting the ‘Remove signature’ button, which appears on the End of Year report after it has been approved and signed, and then make further adjustments.
Please be aware that once either the client’s Final Accounts or Corporation Tax (CT600) return have been filed, you won’t be able to ‘unlock’ to make amendments.
Once you’ve enabled approvals, you’ll see a message at the top of the client’s End of Year report to confirm that the accounts are now available to directors for approval.
4. Invite your client to approve their End of Year report
Director clients with level 8 or 7 access
If your client has the user role of ‘Director’ in FreeAgent and has either full (level 8) access to FreeAgent or level 7 access to their account, you can send an email directly from FreeAgent to notify them that their End of Year report is ready for approval.
A default message will appear in the ‘Message’ area. If you want to edit this text, switch to your Practice Dashboard, select ‘Settings’ from the drop-down menu in the top-right corner and select ‘End of Year’. Scroll to the ‘Email settings’ area and edit the ‘Default email contents’. Select ‘Save Changes’ to complete the process.
Once you are happy with the content of the message, switch back to the client’s account, navigate to the ‘End of Year’ area and select ‘Enable approvals’. If applicable, choose which user of the client’s account will sign the accounts. Remember you’ll only see directors here. Check that you are happy with the message and then type your name to sign the accountant’s report if you’re including one. Select ‘Enable and send’ to complete the process and send the report to your client for approval. If you send the report via email from within FreeAgent, the email will include a link for the client to follow which will take them directly to this area of their account.
Once you have invited the client to approve their End of Year report, they can either follow the link in the email you send them if it comes from FreeAgent, or, if they have level 7 access or above, they can log into their FreeAgent account and select ‘Approve and sign’ in the top-right of their End of Year report.
Director clients with level 6 access or below
If your client has the user role of ‘Director’ in FreeAgent but has level 6 access or below access to their account, you will need to gain their approval by sending them an email from outside FreeAgent. In this situation, select ‘Just enable approvals’ and enter your name to sign the accountant’s report if you’re including one. Select ‘Enable’ to complete the process and then send the client their report to review and approve.
You can download the client's End of Year report as a PDF to attach to the email you send from outside FreeAgent.
When you receive confirmation from your client that they are happy to approve their End of Year report, press the ‘Approve and sign’ button to do this on their behalf.
5. Submit the client’s Final Accounts
When the client’s End of Year report has been approved, you will see the option to ‘File accounts with Companies House’ in the ‘End of Year’ area of the client’s FreeAgent account. You will also see the option to do this from the client’s Final Accounts report. Select this button to file the client’s Final Accounts to Companies House.
Review the information and enter your Companies House presenter account details. You can use the details from either a credit account or a standard account with no credit facility. Next, enter the client’s company authentication code and then select ‘Submit Final Accounts’ to complete the process.
If the submission is successful, you will see a note of the Companies House submission reference number at the top of the screen.
You’ll also see this number on the right-hand panel of the client’s Final Accounts report.
6. Submit the client’s Corporation Tax return
Once you have submitted the client’s Final Accounts report to Companies House, you will see the option to file their Corporation Tax return to HMRC in the ‘End of Year’ area of their FreeAgent account. You will also see the option to do this from the Corporation Tax return area of the client's account.
Review the information, enter your Government Gateway User ID and password and select ‘Submit Corporation Tax Return’ to complete the process.
You’ll see a message confirming that the client’s End of Year accounts are now complete for the relevant accounting year.
Once you have submitted the client’s Corporation Tax return successfully, an IR mark will appear in the ‘Submission receipts’ panel of the return in FreeAgent.
You’ll also find the IR mark, along the Companies House submission number, on the right-hand side of the ‘End of Year’ area of the client’s account.
What happens next?
When FreeAgent receives a response from HMRC and Companies House in relation to the submission of a client’s Final Accounts and Corporation Tax return, an email will be sent automatically to your registered email address in FreeAgent. These emails will confirm whether the client submission in question has been accepted or rejected.