PSC07 Stop to be the Person with Significant Control

Complete the form PSC07 to notify Companies House if you want to stop to be the person with significant control (PSC) for your limited company registered in the United Kingdom.

How to submit PSC07

For this purpose, you may submit your form online or on a printed paper. You would require your company’s authentication code if you are to submit your form online. For paper filing, please download the form from companies house website, print it on a white A4 size paper only and preferably single-sided and get the company’s director or company secretary, if any, to sign it before submitting it to Companies House.

When to submit PSC07

Common situations where you have to submit the form PSC07 to Companies House are:

Ready-made company

You just bought a ready-made company. Usually, you would have to submit the PSC07 to remove the exiting PSC that comes with the ready-made company. At the same time, you would also notify Companies House of your new person with significant control using the form PSC01.

Existing PSC stop to be the person with significant control

You are the existing person with significant control for your limited company. Subsequently, you transferred your entire company to a family member of yours. And, you hand over full control of the company at the same time.

In this situation, you would use the form PSC07 to notify Companies House that you had ceased to be the person with significant control. Concurrently, the other person submit the form PSC01 to give details of himself/herself.

The confirmation statement

Companies House requires every limited company to confirm all your company’s details registered with Companies House are still valid, once every 12 months by submitting your confirmation statement. You have the opportunity to make sure the details of the person with significant control (PSC) registered with Companies House is correct and update your company’s details accordingly then submit your Confirmation Statement.

Limited company or sole trader

The advantages and disadvantages of whether to use a limited company or sole trader to start a business is an important consideration.

First of all, there are two types of limited companies. A private limited company and a public limited company. Registration of a private limited company is relatively straight forward. You only require one person to set up the company. You can be the director and shareholder of the company. In addition, your share capital can be as little as £1. That’s all you need to get started.

On the other hands, incorporation of a public limited company has more legal administration requirements to it such as you cannot trade until you get a trading certificate. Furthermore, a public limited company requires a minimum share capital of £50,000. It is a bit expensive.

Whereas compared to setting up a sole trader business, the setup is simpler. You only need to register your business with HM Revenue and Customs. Then you are good to go.

Limited liability

In terms of business liability, your company shoulders all the liability as opposed to the person running the business. This is because the company and the owner of the company are considered a separate legal entity. Your liability is limited to the amount you invested in the share capital of your company. This includes any guarantees you gave when raising finance for your business.

For example, if you invested £10,000 into your company as share capital and your losses would be limited to this amount in the event of your business failed. In other words, your maximum loss would be £10,000. That’s it.

As with a sole trader or proprietorship, you are exposed to unlimited liability. In other words, your personal assets can be auctioned to pay off your business debts if your business fails.

For instance, when your sole proprietorship business failed and you have a business debt of £100,000. You would have to satisfy this debt using your personal assets no matter what. You may risk being sued bankrupt if you cannot settle the debts quickly. In this respect, a sole proprietorship is a bit risky compared to trading using a company. There is no safety net. Basically you can lose everything at once.

Continuity

Moreover, trading as limited company also provides continuity of the business. The ownership of the company can be transferred easily. In this circumstance, you only have to transfer your share to your next of kin by filing the relevant Companies House forms to that effect.

Whereas for sole proprietorship business normally ceases when the business owner wants to retire or die. However, there may be a way to keep your sole proprietorship business continuity by incorporation.

Company Law

Besides, the Companies Act 2006 have made the requirement to appoint a company secretary for a private limited company is optional. This means that a single person can set up a limited company by himself as discussed above. You can be the sole director and also the sole shareholder of your company if you wish. Except that you must not be an undischarged bankrupt or disqualified by a court from holding a directorship.

On the other hands, as a sole trader, you do not need to comply with the company law. Less hassle.

Stability

Also, many financial institutions, banks and suppliers viewed a limited company as being a form of more stable business entity compared to a sole trader. This is partly because the company accounts, shareholders and directors details are available for public inspection independently at Companies House. This provides more reliable information to creditors about your company history.

On top of that limited company must follow company law when comes to filing Companies House forms and accounts with the Registrar. There is a set of standards maintained.

Administration

For administration purpose, a limited company must deliver confirmation statement and company accounts to Companies House every year. Also, you must maintain statutory books for your company. This includes notifying Companies House when there is a change in the registered office or director etc. You can notify Companies House by filing the correct forms online or on paper. You would require your authentication code to file online. The authentication code is the electronic equivalent of your director and secretary’s signature. Keep it safe.

Additionally, failure to fulfil the legal obligations mentioned above, your director is risk being prosecuted and are subject to fines. There is a late filing penalty for delay in filing your accounts to Companies House too. However, Companies House sends reminders to your registered office to help you (as the director) to comply with the law. Just make sure your registered office address is up to date. Do not worry too much.

To top it up, your company must submit a corporation tax return with HM Revenue and Customs. Your accounts must comply with the Companies Act. In some instances, you must submit audited accounts.

Whereas, for a sole proprietorship, you only required to file self assessment return with HM Revenue and Customs. Furthermore, the accounts are also much simpler compared to that of a limited company accounts.

Conclusion

Considering a limited company or sole trader to start a business, it has become obvious that a limited company is more attractive. Not only It gives a professional image but also project stability to the public. Additionally, using a company to trade also limit your liability and debts in the event of winding up.

Seek advice on complex tax affairs

However, if you have complex tax affairs seek advice from the specialist tax advisers. They would assess your personal tax affairs thoroughly and present you to the best solution that would minimize your tax liability overall.

For example, should you buy an asset under your personal name or under your company name? Given you have income from overseas or are inheriting assets. All these have an impact on your overall tax liability. For this reason, we highly recommend you get a specialist tax advice.

Annual tax on enveloped dwellings

A limited company owns residential property in the United Kingdom with the property valued more than £500,000 is required to pay an Annual Tax on Enveloped Dwellings (ATED). Below are the annual charge payable based on the value of your property.

ATED for 2019 and 2020

Property value1 April 2019 to 31 March 20201 April 2018 to 31 March 2019
More than £500,000 up to £1 million£3,650£3,600
More than £1 million up to £2 million£7,400£7,250
More than £2 million up to £5 million£24,800£24,250
More than £5 million up to £10 million£57,900£56,550
More than £10 million up to £20 million£116,100£113,400
More than £20 million£232,350£226,950

ATED for 2017 and 2018

Property value1 April 2017 to 31 March 20181 April 2016 to 31 March 2017
More than £500,000 up to £1 million£3,500£3,500
More than £1 million up to £2 million£7,050£7,000
More than £2 million up to £5 million£23,550£23,350
More than £5 million up to £10 million£54,950£54,450
More than £10 million up to £20 million£110,100£109,050
More than £20 million£220,350£218,200

ATED for 2015 and 2016

Property value1 April 2015 to 31 March 20161 April 2014 to 31 March 2015
More than £500,000 up to £1 million
More than £1 million up to £2 million£7,000
More than £2 million up to £5 million£23,350£15,400
More than £5 million up to £10 million£54,450£35,900
More than £10 million up to £20 million£109,050£71,850
More than £20 million£218,200£143,750

Your company must complete the Annual Tax on Enveloped Dwellings return and submit it with HM Revenue and Customs.

Seek accountants advice if you are not familiar with ATED.

In addition to ATED filing, your company must also submit company accounts and confirmation statement to Companies House, a corporation tax return and VAT returns if you are a VAT registered company to HM Revenues and Customs.

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