The set-up review explained
This guide is for directors of established limited companies who have never had anyone check how the company is arranged. You will see exactly what a set-up review looks at, what tends to change, and what it tells you about your next tax bill. About ten minutes to read.
Updated 27 September 2026
10 min read
- The short version
- What this guide covers
- What a set-up review actually is
- Structure: the question nobody revisits
- The VAT scheme you never actually chose
- Salary, dividends and what you can safely take
- How to prepare for one
- Where set-ups go wrong
- When this is worth paying for
- Frequently asked questions
The short version
- A set-up review checks four things: your structure, your VAT scheme, how you pay yourself, and your bookkeeping software.
- Most limited company set-ups were decided in year one and never revisited, even after turnover and costs changed shape.
- The VAT scheme is the most common thing found wrong, especially for consultants whose costs carry little recoverable VAT.
- The review ends in a written list of what should change and why, including where nothing needs changing at all.
- Done before the year end, it also produces a corporation tax figure and a dividend headroom number you can plan around.
What this guide covers
The set-up review explained in one line: it is an hour spent checking how your limited company is actually arranged, before anyone touches a filing. Structure, VAT scheme, salary and dividends, software. Four areas, one written answer on each.
I run it for every new client at Nexus, and I run it for owners who only want the review. It exists because the same thing keeps happening. A company gets set up in year one, often at speed. The VAT scheme is picked from a dropdown. The salary is whatever the software suggested. Then turnover goes from £60,000 to £400,000, staff arrive, costs change shape, and nobody goes back to check whether any of it still fits.
Companies House reports hundreds of thousands of new companies each year. Very few of those owners are ever told, in writing, why their set-up is the one they have.
What follows is what gets looked at, the questions each area answers, the mistakes that show up most often, and what you should have in your hand when the review is finished.
What a set-up review actually is
It is a structured check of how your company is arranged, carried out before any compliance work starts.
It takes about an hour. You have it with me, Nasir, and the same person does the work afterwards. Nexus takes three new clients a month so that stays true.
The four areas
- Structure: the company itself, shareholdings, and whether the wrapper still suits the trade.
- VAT: which scheme you are on and what your actual cost base recovers.
- Pay: the split between salary and dividends, and what the company can legally distribute.
- Software and records: whether the numbers are current enough to answer a question in March.
What you get at the end
A written list of what should change and why. Where something is already right, I say so and give the reasoning, because knowing your set-up is sound is worth having too.
It is a review, not a pitch. Sometimes the answer is that nothing needs to move and the only change is the timing of your corporation tax forecast.
Structure: the question nobody revisits
The first area is whether a limited company, arranged the way yours is, is still the right container for what you now do.
For an established business turning over £150,000 or more, the company itself is usually correct. The questions sit underneath it.
Things that get checked
- Who holds the shares, and whether the share classes still match how profits are taken.
- Whether a spouse or partner working in the business is recognised properly in pay or shareholding.
- Whether a second trade sitting inside the same company should be somewhere else.
- Whether directors and people with significant control are recorded correctly at Companies House.
Sole traders at £150,000 and above
If you are still trading as a sole trader at that level, the review becomes a comparison. Corporation tax has a small profits rate and a main rate with marginal relief, and dividend taxation has tightened since 2020, so the saving is narrower than it was. It is still often real, but it should be shown to you in your own figures before you move.
Current rates and thresholds are published on gov.uk.
The VAT scheme you never actually chose
This is where the review most often finds money, because the scheme was set once and then left alone.
There are three common positions for a trading company: the standard scheme, the flat rate scheme, and cash accounting. Each suits a different cost base.
What decides it
The test is what sits in box 4 of your returns, the VAT you reclaim on purchases. A construction company buying materials and plant recovers a lot. A consultant billing time recovers very little.
One procurement consultant came to me on the standard scheme. His box 4 was close to empty, because his costs were overseas software and reverse-charge services with no UK input VAT to reclaim. Moving him to the flat rate scheme brought his VAT bill down every quarter, with no change to turnover and no change to what he charged clients.
The other half of the check
Cash accounting matters if you invoice on 60-day terms and pay VAT before clients pay you. Registration thresholds and scheme eligibility limits change, so they get read against the current gov.uk position rather than memory.
Salary, dividends and what you can safely take
The third area is how money leaves the company, and whether the amount you take is actually available.
Owner-directors usually take a modest salary through payroll and the rest as dividends. The salary level interacts with National Insurance thresholds, pension contributions, and the corporation tax deduction the company gets.
Dividend headroom
A dividend can only be paid from distributable reserves, meaning post-tax retained profit. Plenty of directors take drawings monthly and find out at the year end that part of it was never covered by profit.
That excess lands in a director’s loan account, and an overdrawn loan account carries its own tax charge if it is still outstanding nine months after the year end.
The paperwork
- Dividend vouchers and a board minute for each declaration.
- Payroll run on schedule with real time information filed.
- Pension contributions timed to fall in the right accounting period.
The review sets a figure you can take each month and the point at which it should be checked again. That number is the one most owners say they have never been given.
Software and records behind the numbers
The fourth area is practical: can your books answer a question on the day you need to ask it.
Bookkeeping that is nine months behind is not a compliance problem until the deadline arrives. It is a decision problem immediately. You cannot price a job, plan a hire, or decide on a van when the last reconciled month is October.
What gets looked at
- Whether bank feeds reconcile and how far behind the ledger is.
- Whether business and personal spending run through separate accounts.
- Whether the software you pay for is doing the job, or duplicating a spreadsheet.
- Whether Making Tax Digital obligations for VAT are being met properly.
Records and how long to keep them
Company records should be kept for at least six years from the end of the accounting period. HMRC increasingly cross-references filed figures against bank and platform data, so gaps and late filings draw attention on their own.
Clean, current records are the cheapest protection available, and they cost nothing extra once the routine exists.
What comes out of the review, and when
The review produces two outputs: a written list of changes, and numbers you can plan around.
The written list
Each of the four areas gets an answer. Keep as is, change now, or change at the next year end. Where a change has a cost or a timing constraint, that is stated with it.
The numbers
Before your year end, you get a corporation tax figure and a dividend headroom figure. The point is timing. Knowing the bill a month before it lands means the money is set aside and the decision on what to take is yours.
Companies House obligations in 2026
The register is tightening. Identity verification for directors and people with significant control is being enforced, filing fees have risen, and more detail on ownership is required. These are administrative rather than expensive, but missed deadlines sit on the public record.
Current filing requirements are on Companies House. The review confirms your filings are current and your registers match reality before anything else is planned.
How to prepare for one
The review works better when three or four documents are to hand. None of it takes long to gather.
- Pull your last two sets of accounts — Your filed accounts and corporation tax returns for the last two years show the shape of the business, the retained profit position, and how the previous accountant handled directors’ pay. If you cannot find them, the accounts are on the public register at Companies House and take two minutes to download.
- Find your last four VAT returns — The returns matter less than the workings behind them. What I want to see is the relationship between box 1 and box 4, because that decides whether your scheme is the right one. If you are on the flat rate scheme, note the percentage you are using and when it was set.
- Write down what you take out — Salary, dividends, anything drawn irregularly, and anything the company pays on your behalf. Owners are often surprised by the total once it is written in one place. This is the figure that gets tested against distributable reserves during the review.
- Note the decisions coming up — A hire, a vehicle, a premises, a price increase, a large piece of equipment. The review is more useful when it is pointed at real decisions rather than run in the abstract. Bring rough timings and rough amounts; precision is not needed at this stage.
- Book the hour and get the list — The review itself runs about sixty minutes, remotely in most cases. Afterwards you get the written list of what should change, why, and in what order. It is included when you join Nexus, and available as a one-off piece of work if you only want the review.
- Put the forecast date in the diary — The last action is scheduling the corporation tax and dividend forecast for a month before your year end. That is the point at which the review stops being a document and starts changing what you do with the cash sitting in the company account.
Where set-ups go wrong
Four patterns come up again and again in established companies that have never had their arrangement checked.
- Assuming year one still fits — The set-up chosen when you turned over £70,000 rarely suits a company at £400,000 with staff. Nothing breaks loudly, so nobody looks. The cost shows up quietly, quarter after quarter, in a VAT scheme or a pay structure that stopped being the right one years ago.
- Picking a VAT scheme by default — Most companies are on the standard scheme because it was the option nobody thought about. For a business with real input VAT that is correct. For a consultant whose costs are overseas software and subcontracted time, it can mean paying more every quarter than the same turnover requires.
- Taking dividends without checking reserves — Regular drawings feel like salary and get treated like salary. If post-tax profit does not cover them, they are not dividends. The balance sits in a director’s loan account and attracts a tax charge if it is still outstanding nine months after the year end.
- Leaving the review to year end — By the time the accounts are being prepared, the year is closed and most options have gone. Pension timing, equipment purchases, dividend timing and salary changes all have to happen inside the accounting period. A review done afterwards can only describe what already happened.
When this is worth paying for
If you run a small company with one income stream, no staff, and no VAT registration, you can work through most of this yourself against the guidance on gov.uk.
It stops being a do-it-yourself job in three situations. The first is when your cost base has changed and nobody has retested the VAT scheme against it. The second is when you are taking money out monthly without knowing your distributable reserves. The third is when a decision on hiring, pricing or investment is waiting on numbers you do not currently trust.
Nexus works with established limited companies, and with sole traders at £150,000 and above where incorporation is the obvious move. One monthly fee covers accounts, corporation tax, VAT, bookkeeping, payroll and your self assessment, with the advice included rather than billed by the hour.
Frequently asked questions
What is the set-up review in plain terms?
It is an hour spent checking four things about your limited company: the structure, the VAT scheme, how you pay yourself, and the bookkeeping software behind the numbers. You get a written list afterwards saying what should change, what should stay, and the reasoning for each.
Do I have to switch accountants to get one?
No. It is included when you join Nexus, and it can be done as a one-off piece of work if you only want the review. Some owners take the findings back to their current accountant and ask them to action the changes, which is a reasonable outcome.
How long does the set-up review take?
The conversation runs about sixty minutes, usually remotely. The written findings follow within a few days once your VAT returns and accounts have been read properly. If a change needs a filing, such as a VAT scheme move, the timing depends on HMRC processing rather than on us.
What if nothing needs changing in my company?
Then I tell you that and explain why each part of the set-up is correct. That is a legitimate result. Knowing your VAT scheme suits your cost base, and that your dividends are properly covered, is worth having in writing rather than assumed.
Does the review cover sole traders considering a limited company?
Yes, where turnover is £150,000 or more. The review becomes a comparison run on your actual figures: what you pay now against what a company would pay, including the dividend position and the VAT scheme that would apply. You see the numbers before deciding anything.
When in the year should the review happen?
As early as possible, and certainly well before your year end. Pension contributions, equipment purchases, dividend timing and salary changes all have to fall inside the accounting period to affect that year’s corporation tax. A review run after the year end can only describe what already happened.
Related guides and pages
The next things to read if you are testing whether your current set-up still holds up.
Final thoughts
The set-up review explained simply: someone reads how your company is arranged, tells you whether each part still fits, and puts it in writing. Structure, VAT scheme, pay, software.
Most established companies are carrying at least one decision made years ago under different conditions. Usually it is the VAT scheme. Sometimes it is a salary level nobody has moved since incorporation. The cost is rarely dramatic in any single quarter, which is exactly why it survives.
If you want to know whether yours holds up, the two-minute quiz tells you whether Nexus is the right fit, and the review follows from there.