Tax accounting software for a private limited company in the UK includes the using accounting software to produce the vat tax return and calculate the company net profit with the tax software calculating the outstanding tax liability and producing an automated corporation tax return.

Company Accounting Software.

All types of business accounting software produce a net taxable profit being the difference between sales income received and purchase expenses. The company accounts package often does not include capital and tax allowances on fixed assets which are essential elements to enable final tax accounting which the production of the tax liability.

Since tax allowances change then not all accounting packages cope well with this aspect as either it is ignored and any claims for capital allowances need to be input manually which often requires knowledge of the tax system. In any event many systems require the current year tax allowances to be input.

Tax accounting packages do exist where the current tax rates and rules issued by the taxation authority for a specific financial tax year. Such tax accounting software either has to include an upgrade service to incorporate the different tax rules that apply each year or a new package has to be purchased for each new financial year.

Every quality tax accounting software package should calculate the corporation tax liability which is one of the most significant costs of every business. If the accounting software does not produce an automated calculation of the tax liability then the tax due has to be entered manually usually by journal entry.

Manually entering the tax liability is a function frequently best dealt with by an accountant since the transaction also involves the final completion of the company accounts and potentially journal entries to account for distributions from the after tax profit and retained profits.

Vat Tax Return Software.

It would be unusual to find a company accounts package that did not automatically generate the quarterly figures for the vat return since almost all companies are vat registered.

The vast majority of companies have a sales turnover which exceeds the vat threshold limit at which vat registration is obligatory; most companies sales turnover exceeds this threshold at which point vat registration is mandatory.

The accounting software must be capable of satisfying the requirements of the taxation authority which in regard to a vat return includes the provision of an accounting audit trail of financial transactions.

Tax Software and CT600 Corporation Tax Return.

In the UK a private limited company has to complete a corporation tax return each financial year. Known as the CT600 companies with a sales turnover which qualifies as a small company can complete the CT600 short return.

Completing even the short version of the CT600 tax return is a specialist accountancy area which few non accountants are familiar with or find easy to deal with since it demands intimate knowledge of the tax system. Completing the corporation tax return can be a daunting task for a non accountant including several hours study of the accompanying notes. It is no simple task for many accountants who do not specialise as a tax accountant.

Most accounts packages do not include tax software encrypted within the packages to produce the corporation tax return but may include an online feed to assist in the submission of ther company tax return.

Using the right tax software the CT600 corporation tax return can be completed automatically.

To do so the company accounts package has to include all the relevant tax rules and rates applicable for fixed assets and the calculation of the tax liability. Both tax rates and the rules in which tax is collected are frequently changed. It is in fact unusual if the tax rules are not changed in some part every single year. Suitable tax software is essential to perform this annual process.

The tax accounting takes the tax rates and rules automating the work of a tax accountant to produce the tax liability. The term tax software indicates automation based upon data input which the computer package then processes to produce the desired output. Company tax software produces the tax requirements of the company including both the corporation tax liability and completion of the tax return.

THE COMPANIES
(APPOINTMENT OF TRUSTEES)
ACT, 1972
[Gazette of Pakistan, Extraordinary, 25th September, 1972]
An Act to provide for the management of the affairs of certain companies.

The following Act of the National Assembly received the assent of the President on the 24th September, 1972, and is hereby published for general information;”

WHEREAS it is expedient to provide for the management of the affairs of certain companies and for matters connected therewith:

It is hereby enacted as follows:

1. Short title, extent, application and commencement.–
(1) This Act may be called the Companies (Appointment of Trustees) Act, 1972.
(2) It extends to the. whole of Pakistan.
(3) It applies only to companies the objects of which are not confined to one Province.
(4) It shall come into force at once.

2. Act to override other laws.– This Act shall have effect notwithstanding anything contained in the Companies Act, 1913 (VII of 1913) or in memorandum or articles of association.

3. Definitions.– In this Act, unless there is anything repugnant in the subject or context–
(a) “Assets” include all rights and powers and properties, whether movable or immovable, such balance, reserve funds, investments, deposits and all other interests and rights in or to or arising out of any such property and the books of accounts and documents;
(b) “company” has the same meaning as in the Companies Act, 1913 (VII of 1913), and
(c) “trustee” in relation to a company means the trustee appointed under section 4 in respect of such company.

4. Appointment of trustees.– (1) If the Federal Government is of opinion that it is necessary in the public interest so to do, the Federal Government may, by notification in the official Gazette, appoint a trustee in respect of a company the registered office of which is located in Pakistan beyond the provinces of Balochistan, the North-West Frontier, the Punjab and Sindh on such terms and conditions as may be determined by the Federal Government.

(2) The trustee shall hold office during the pleasure of the Federal Government.
(3) The trustee may, by writing under his own hand addressed to the Federal Government, resign his office.

5. Management of company to vest in trustee.–
(1) Upon the appointment of a trustee under section 4 in respect of a company, the management of the affairs of such company in so far as they relate to its business and assets and liabilities in the Provinces referred to in that section and all such assets and liabilities shall vest in that trustee and any person or authority exercising or having the right to exercise immediately before such appointment any power or function in relation to the management of such affairs shall cease to exercise or to have the tight to exercise such power or function.

(2) The trustee appointed in respect of a company shall, where necessary, open on behalf of such a company, with a branch of the National Bank of Pakistan an account to which he shall credit from time to time all moneys received by him on behalf or on the account of the company after deducting therefrom such amount representing the expenses of the management of the affairs of the company as he may determine with the approval of the Federal Government.

(3) Every trustee appointed in respect of a company shall keep proper account of all income .and expenditure received or incurred by him on account of company.

(4) Where a trustee is appointed in respect of a company, the Federal Government may, by order remove from office any officer howsoever designated performing or having the right to perform any function in relation to the management of the affairs of the company in so far as they relate to its assets or liabilities referred to in subsection (1).

6. All assets to be delivered to trustee.– No officer of a company, nor any, other person, retain or fail to deliver to the trustee any assets which vest in the trustee under section 5.

7. Powers of trustee.– The trustee. appointed in respect of a company shall exercise all the powers and functions of the Board of Directors of the company in so far as they relate to the assets and liabilities of the company in the Provinces referred to in section 4.

8. Transfer of assets prohibited.– No person shall transfer any of the assets of a company in respect of which a trustee has been appointed or create any charge or encumbrance on such assets and any transfer made or charge or encumbrance created in contravention of this section shall be void.

9. Liability of companies.– When a trustee is appointed in respect of a company only such liabilities of the company shall be deemed to be liabilities relating to the assets of the company vested in the trustee as may by determined by such authority. and in such manner as may be prescribed by rules made under this Act.

10. Amounts payable to trustee.– (1) Any amount payable to a company in respect of which a trustee has been appointed shall be paid to the trustee by the person liable to pay the same.
(2) Any person makes a payment under subsection (1) shall discharged from further liability to pay to the extent of the payment so made.
(3) Any payment made otherwise than in accordance with subsection (1) shall not discharge the person paying it from his obligation to pay the amount due, and shall affect the right of the trustee to enforce such obligation against any such person.

11. Instructions to trustee prohibited.– No person shall except on the authority, of the Federal Government, give any instructions to the trustee, not shall any person in any manner obstruct him in the discharge of his functions.

12. Bar of jurisdiction, etc.– (1) No Court shall call in question, or permit to be called in question, anything done or any action taken or purporting to be done or taken under this Act.
(2) No Court shall grant any injunction or make any order, nor shall any such Court entertain any proceedings, in relation to anything done or intended or purported to be done under this Act.
(3) No suit, prosecution or other legal proceedings shall lie against the Federal Government or the trustee or any person for anything in good faith done under this Act or any rule or order made or notification issued thereunder.

13. Power to make rules.– The Federal Government may, by Notification in the official Gazette, make such rules as appear to it to be necessary or expedient for carrying out the purposes of this Act.

14. Delegation of powers.– The Federal Government may, by Notification in the official Gazette, direct that all or any of its powers under this Act shall, subject to such conditions, if any, as may be specified in the notification, be exercised by such officer or authority- as may be so specified.

15. Removal of difficulties.– If any difficulty arises in giving effect to any provision of this Act, the Federal Government may make such order, not inconsistent with the provisions of this Act, including an order modifying the provisions of the memorandum or articles of association of company, as it considers necessary. or expedient for the purpose of removing of that difficulty.

16. Repeal. [Omitted by Ordinance XXVII of 1981].

Forms of Business

There are three main forms of business found in this country:

(a) Sole Proprietorship

(b) Partnership

(c) Company

Sole Proprietorship

In a sole proprietorship, an individual on his/her own account carries out the business or profession.
No formal procedure or formality is required for setting up a sole proprietary concern.

Partnership

A partnership is a business relationship entered into by a formal agreement between two or more persons or corporations carrying on a business in common.
The capital for a partnership is provided by the partners, who are liable for the total debts of the firms and who share the profits and losses of the business concern according to the terms of the partnership agreement.
Partnerships (other than banking companies) are generally limited in size to twenty partners.
The interest of a partner is transferable only with the prior consent of the other partner(s).
However, a partner’s right to a share of the partnership income may be received in trust for another person.
The partnerships are classified into the following two categories for the purpose of taxation:

(i) Registered Firms

(ii) Unregistered Firms

The income of the registered firm is subject to Super Tax before distribution to the partners.

Also the individual income of the partners is subject to income tax at the usual rates.

The unregistered firms, income tax may be levied on the firm’s income and the partners are not liable to pay tax on the shares of profit received from the unregistered firm(s).

COMPANY

A company is a legal entity formed under the Companies Ordinance, 1984. It can have share capital or can be formed without share capital.
A company having share capital may be formed as:

(i) A company limited by shares.

(ii) A company limited by guarantee.

(iii) An unlimited company.

Company Limited by Shares
The liability of its members is limited to the extent of their shares in the paid-up capital of the company. These companies may further be classified as public limited and private limited companies.
Public Limited Companies can be formed by at least seven persons by subscribing their names to the ‘Memorandum and Articles of Association’ of the company. The word ‘Limited’ is used as the last word of its name.
Private Limited Companies may be formed by at least two persons by subscribing their names to the ‘Memorandum and Articles of Association’ of the company. A private limited company, by its Articles of Association:

(i) Restricts the right to transfer its shares;

(ii) Limits the number of its members to fifty; and;

(iii) Prohibits any invitation to the public to subscribe for shares or debentures of the company.
A private limited company is required to use the words “(Private) Limited” as the last words of its name.

Company Limited By Guarantee
A company limited by guarantee means the company having the liability of its members limited by memorandum to such amounts as the members may respectively undertake to contribute to the capital of the company in the event of its winding up.
A company limited by guarantee is usually formed on a ‘non profit basis’. Companies limited by guarantee use the words (Guarantee) Limited” as the last words of their name.

UNLIMITED COMPANY
Means a company having unlimited liability of its members.

REQUIRED DOCUMENTS TO INCORPORATE A FOREIGN COMPANY IN PAKISTAN

A foreign company incorporated outside Pakistan, is required to submit the following documents to the concerned agencies within 30 days of establishing presence in Pakistan:
A certified copy of the charter, statute or Memorandum and Articles of the company, in English or Urdu, accompanied by prescribed Form 38.
Address of the registered or principal office of the company on Form 39.
A list of Directors, the Chief Executive and Secretaries (if any) of the company on Form 40.
Particulars of the principal officer of the company in Pakistan on Form 41.
Particulars of person (s) resident in Pakistan authorized to accept services on behalf of the foreign company on Form 42.
Address of the principal place of business in Pakistan of the foreign company on Form 43.
Any change or alteration in particulars stated at serial No. 1 to 6 above is required to be filed on Form 44 with the registrar concerned within 30 days of such change or alteration; and
Foreign company is required to give notice on Form 46 to the registrar concerned at least 30 days before it intends to cease to have a place of business in Pakistan and to publish a notice of such intention at least in two daily newspapers circulating in the province or provinces in which such place or places of business are situate.;
Companies doing business in Pakistan must register with the Registrar of Companies under the Companies Ordinance, 1984.Securities & Exchange Commission of Pakistan (SECP) is responsible for this registration.

LIMITED LIABILITY COMPANY

The liability of its members is limited to the extent of their shares in the paid-up capital of the company.
These companies may further be classified as public limited and private limited companies.
Public Limited Companies can be formed by at least seven persons by subscribing their names to the ‘Memorandum and Articles of Association’ of the company. The word ‘Limited’ is used as the last word of its name.
Private Limited Companies may be formed by at least two persons by subscribing their names to the ‘Memorandum and Articles of Association’ of the company.
A private limited company, by its Articles of Association:

(i) Restricts the right to transfer its shares;
(ii) Limits the number of its members to fifty; and;

(iii) Prohibits any invitation to the public to subscribe for shares or debentures of the company.

6. A private limited company is required to use the words “(Private) Limited” as the last words of its name.

FEES TO BE PAID TO THE REGISTRAR OF COMPANIES

 Average fees for Professional Company Secretarial Services

The services of a Professional Company are hired to prepare the necessary documents like Article of Association & Memorandum of Association etc.

Average fee for a medium sized Company is asunder:
For Private Company 20,000
For Public Company 20,000

Mode of Forming Companies
Any seven or more persons associated for any lawful purpose may, by subscribing their names to the Memorandum of Association and complying with the requirements of the Companies Ordinance, in respect of the registration, form a public company, and any two or more persons, so associated may, in like manner, form a private company.
Prior approval of the ministries (which regulate their respective functions) noted against each category of the following specified nature of companies is required before incorporation of such companies.

(1) Banking Company
Ministry of Finance/State Bank of Pakistan.

(2) Insurance Company
Ministry of Commerce.

(3) Investment Finance Company (Investment-Bank)
(i) Ministry of Finance.
(ii) State Bank of Pakistan.

(4) Leasing Company
Securities and Exchange Commission of Pakistan.

(5) Venture Capital Company
Securities and Exchange Commission of Pakistan.

(6) Asset Management Company
Securities and Exchange Commission of Pakistan.

A company which invests in any of the following industries

(i) Arms and Ammunition
Ministry of Industries/Board of Investment.
(ii) Security Printing, Currency and Mint.

Ministry of Industries/Board of Investment.

(iii) High Explosives.
Ministry of Industries/Board of Investment.

(iv) Radio Active Substances
Ministry of Industries/Board of Investment.

Availability of Name of the Company

The first step with regard to incorporation of a company is to confirm the availability of the name of the proposed company from the concerned registrar on payment of a fee of Rs.100, The name should not be inappropriate, deceptive or designed to offend the religious sensibilities of the people, and it should neither be identical nor have a close resemblance to the name of any existing company.

For companies that wish to open their branch / liaison or representative offices in Pakistan may apply to BOI for permission on prescribed form.

The BOI will process and decide such cases within a period of 6 to 8 weeks.

Details on the required documentation, etc. are available at all offices of the BOI. A specimen of the application for permission to establish branch/liaison offices by foreign companies is presented in Annex-XXI.

Permission for opening of branch/liaison offices will be granted by the BOI for a period of 3 to 5 years. Further extensions will be granted by the BOI after reviewing and examining the past performance of foreign companies. Requests for renewal or extension will be processed by the BOI within two weeks provided the requests are supported with complete documentation

Opening of Liaison Offices of Foreign Firms

Foreign companies that intend to undertake export activities Pakistan will be registered without families

Permission to companies engaged in contractual obligation of contracts will be granted on production of valid documents with circulating to government departments the activities of the foreign airline companies, Pakistani General Sales Agents and

Courier Companies do not come under the industrial category and therefore, in order to monitor their operations the government may continue to grant permission for their liaison office in consultation with the concerned agencies

Permission for opening a liaison office will be granted by BOI in consultation with the concerned agencies. A specimen of application form for permission for Pakistani firms to work as agent for Foreign Firms is presented in Annex-XX.