How to prepare for filing Final Accounts and Corporation Tax returns through FreeAgent

This article explains the steps you’ll need to take before you can file your End of Year accounts in FreeAgent.

Before you file your Final Accounts and Corporation Tax (CT600) return for the first time in FreeAgent, make sure that you’ve completed the steps outlined below.

1. Check that FreeAgent supports the type of accounts that you need to file

FreeAgent supports accounts prepared according to the financial reporting standard for active companies limited by shares that meet HMRC’s definition of a ‘micro-entity’ (FRS 105).

Please note that FreeAgent won’t indicate whether you qualify to prepare accounts under FRS 105 or not. Find out more about the Final Accounts report in FreeAgent and the eligibility for filing FRS 105 accounts.

If FRS 105 micro-entity accounts are filed through FreeAgent by mistake, these will not be automatically rejected by Companies House. Companies House will check some of the data on the accounts, such as the name, signature and period, but it won’t check if the right accounting standards have been applied when preparing the accounts. It is the responsibility of the director and their accountant to make sure that the accounts have been prepared correctly.

Please note that at the moment, there are certain Corporation Tax scenarios which are unsupported in FreeAgent.

Unsupported scenarios

FreeAgent can only produce CT600 forms and allow you to file Corporation Tax returns for accounting years ending on or after 27th October 2020. If your accounting period ends before this date, FreeAgent will work out a Corporation Tax projection for you, which you can use when you file your 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 is dormant
• The company needs to record research and development activity
• The company has asset disposals with chargeable gains due
• The company has income from a property business

If your 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 company, unfortunately you won’t be able to use FreeAgent to file the 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.

What happens when you file your accounts through FreeAgent

When you submit your Final Accounts report to Companies House, FreeAgent will file a shortened version of your accounts to Companies House. The term ‘Abbreviated’ in FreeAgent refers to ‘shortened accounts’ and is not included in the title of the accounts that are filed with Companies House.

When you submit your Corporation Tax return to HMRC, FreeAgent will include a full set of accounts with the submission as per HMRC’s requirements.

2. Check that your accounting dates in FreeAgent are correct

Make sure that the dates in FreeAgent match the dates held at both Companies House (for filing your accounts) and HMRC (for filing your Corporation Tax return). Find out more about accounting dates in FreeAgent.

3. Check that the company name and address are correct

Make sure that the company name and address in FreeAgent match those held at both Companies House (for filing your accounts) and HMRC (for filing your Corporation Tax return). It's possible to use a different trading name on your invoices, but if you do, the submission of the reports may be rejected.

Find out how to add and edit your business's details.

4. Apply for a presenter account

In order to file accounts through FreeAgent, you will need to apply for a presenter account with Companies House. You will also need to enter the company authentication code issued to you by Companies House when you incorporated the company, along with the presenter ID credentials, as part of the filing process. If you have lost the company authentication code, you can request a copy from Companies House.

Please note that if you receive your presenter ID credentials from Companies House via email, you’ll need to wait at least 24 hours before you can use them to file your accounts in FreeAgent. Find out more about how to apply for a Companies House presenter account.

5. Set up a business tax account

Make sure that you’ve set up a business tax account with HMRC and entered the correct ‘Corporation Tax Reference’ in the ‘Company Details’ section of your ‘Settings’ area. Find out how to add and edit your business's details.

When setting up a business tax account on HMRC’s website, make sure that ‘Corporation Tax’ has been enabled as a service. It should look similar to the image below.

If Corporation Tax hasn’t been enabled as a service, select ‘get online access to a tax, duty or scheme’ and follow the steps provided. Please note that if you do need to do this, HMRC will send an activation code to you in the post which can take up to 10 days to arrive. Once you’ve successfully enrolled for online filing, you’ll see a notice advising of return deadlines.

If you haven’t filed a Corporation Tax return yourself before, for example if your accountant was doing this for you previously, you may need to log into your business tax account and authorise Corporation Tax as a service.

What happens next?

Once you’ve set up a business tax account, HMRC will issue you with Government Gateway login credentials that you can use to file Final Accounts and Corporation Tax returns through FreeAgent. Please note that these can take a few weeks to arrive and they need to be entered into FreeAgent manually when you file your Corporation Tax return.

You’ll need to wait until seven days after your accounting year end date before you can finalise your End of Year report and file your accounts. This is to allow for bank transactions and exchange rates to be pulled through to FreeAgent so that filed accounts are ‘complete’ with the required transactions for the accounting period.