Many UK company directors assume that government departments automatically share information. In practice, it is not how the system works. HM Revenues and Customs (HMRC) and Companies House are two separate entities with different roles, systems, and responsibilities. If the information they hold about your company does not match, it can lead to confusion, penalties, and in some cases, serious compliance issues.
The difference between HMRC and Companies House:
HMRC is responsible for tax. It deals with corporation tax, VAT, PAYE, Self-Assessment and other tax-related matters. If your company owes tax, files a tax return or receives a tax penalty, that is handled by HMRC.
Companies House, on the other hand, maintains the official public register of UK companies. It records information such as:
- Company name and number
- Registered office address
- Director and shareholder details
- Confirmation statements
- Annual statutory accounts
Although both organisations hold information about your company, they do not automatically update each other. That means for example, if you change your registered office address at Companies House, that does not automatically update HMRC’s records. You must notify both separately when required.
This lack of automatic synchronisation is where problems often begin.
Common Reasons records do not match:
There are several typical situations where discrepancies can occur.
1. Different registered office addresses:
One of the most common mismatches involved the registered office address. This is the official address where legal documents are sent. You might update Companies House, but forget to updated HMRC, or vice versa.
Missing letters from HMRC could mean you overlook reminders to file a corporation tax return or pay tax that is due. This can lead to late filing penalties and interest charges. If Companies House correspondence is missed, the company could face fines or even a strike-off warning. In serious cases, if official letters are ignored for too long, Companies House has the authority to remove the company from the register.
Keeping your registered office details consistent across both entities is important to avoid these problems.
2. Director Information not matching:
Another common issue arises when director details differ between the two entities. Companies House must be informed whenever a director is appointed or resigns. However, HMRC’s systems do not automatically mirror those changes.
If HMRC does not recognise a director as authorised, that individual may struggle to access the company’s tax account or communicate effectively with HMRC. While this is typically an admin issue rather than a serious offence, it can delay important filings and create unnecessary stress.
By making sure that both Companies House and HMRC have up-to-date director information, it helps prevent access and authorisation issues.
3. Difference in Trading status:
Confusion can also occur if one organisation believes the company is dormant while the other believes it is active. For example, Companies House may list the company as active, but HMRC may have it recorded as dormant for corporation tax purposes.
If HMRC believes your company is trading, it will expect Corporation Tax returns. Failure to file them will result in automatic penalties. In some cases, HMRC may even issue estimated tax assessments if returns are not submitted on time. On the other hand, if HMRC thinks your company is dormant when it is actually trading, you might not receive reminders to file returns, which can result in missed deadlines and unexpected fines later. You can update your trading status to dormant on HMRC's website.
Ensuring that your trading status is correctly reported to both organisations is key to staying compliant.
4. Financial figures that do not align:
The most serious type of mismatch involves financial information. The accounts you file at Companies House should match the figures reported to HMRC in the Corporation Tax return, meaning the overall profit and loss figures should be consistent.
If significant differences appear, such as higher profits in the accounts filed at Companies House but lower profits declared to HMRC, this may raise concerns. HMRC has the power to open a compliance check if they believe tax may have been underpaid. Depending on the circumstances, penalties could apply. The severity of the penalties depends on whether the error careless, accidental or deliberate.
Therefore, it is essential to ensure that the accounts and tax returns are prepared accurately and reviewed carefully before submission.
How mismatches are usually discovered:
In many cases, discrepancies are not immediately detected. HMRC and Companies House do not constantly compare records in real time. Problems often arise during specific events, such as a tax enquiry, a bank loan application, an investment review or when a new accountant reviews the company’s records.
Sometimes directors will only realise there is an issue after receiving a penalty notice or compliance letter. By that stage, additional costs may already have been incurred.
How to correct the problem:
If you discover that records do not match, it is important to act promptly. The first step is to identify exactly what information differs. You must carefully compare addresses, director details, accounting periods, trading status and financial figures.
Once the issue is clear, you can correct the relevant record. Many Companies House filings can be amended online. corporation tax returns can usually be amended within 12 months of the filing deadline. If that deadline has passed, you may need to contact HMRC directly to explain the situation.
If tax has been underpaid due to an error, you must disclose the information to HMRC rather than waiting for them to discover it.
Conclusion:
Most mismatches between HMRC and Companies House are the result of simple administrative errors rather than intentional wrongdoing. However, even small inconsistencies can lead to penalties, missed correspondence or compliance checks if left unresolved.
The key takeaway is that HMRC and Companies House are separate reporting bodies. Updating one does not automatically update the other. By keeping accurate records, reviewing filings carefully and ensuring both organisations hold consistent information, you can reduce the risk of complications and keep your company fully compliant.
