UK CT - Corporation tax general

Definition of an associated company for CT purposes

Companies are associated where one controls the other, or where they are both under the control of the same person. (control = 50% min.)

When will a person ‘control‘ a company for the purposes of associated companies for CT?

When it owns / is entitled to more than 50% of either:

• voting power

• share capital

• entitlement to distributeable profits / assets on winding up

When is corporation tax due for small companies?

9 months & 1 day after the end of the accounting period

Explain the duty to notify chargeability

• Company must give written notice to HMRC within 3 months of when they come within the charge to CT

• The notice must state when the Accounting period began

Explain the Notice to file return (CT603)

• When HMRC are aware that a company is within the charge to CT, they will send a notice requiring the company to submit a CT600 within a few weeks of the end of their POA.

• No obligation to file until this is received

• If company hasn’t received the notice, it must notify HMRC of this within 12 months of the end of a POA

When is a tax return due for submission?

12 months from the end of the POA, unless they had to notify HMRC about the lack of a notice to file which will extend it by a further 3 months.

What are the enquiry windows for small and large companies?

Small = 12 months from the date the return is received

Large = 12 months from the date the return was due

What is the enquiry window when a return is filed late?

HMRC have a minimum of 12 months pleas up until the next quarter date

How long must a company keep and preserve records for?

6 years from the end of the period for which the company may be required to deliver a tax return

What makes a compnay large or very large?

Large

• Augmented profits exceed £1.5 million but not £20m

Very large

• Augmented profits exceed £20m

How do you calculate augmented profits?

• TTP + Dividends from unassociated companies (<51% sub)

• Apportion for short AP

• Apportion for associated companies

What are the QIP dates for large companies?

• 1st payment = 14th day of month 7 from start of AP

• Subsequent payments = 3 months after previous instalment

• Final payment = 3 months + 14 days from end of accounting period

• 7, 10, 13, 16

What are the QIP dates for very large companies?

12 month AP:

• 14th day of months 3, 6, 9 and 12 in the AP

AP less than 12 months:

• Final installment day is 14th day of last month in AP

• First installment day is 2 months and 13 days after AP starts

• Other installments will be the 3 month period between each

What is the amount due on each installment for a large and very company?

3/n * estimated CT liability

• 12 month AP = (3/12)*4

• 10 month AP = 3 lots of (3/10) and the final will be (1/10)

What are the exceptions to paying CT by instalments?

1. If comps AP don’t exceed £10m and they weren’t a large or very large comp for the prior 12 months,

2. Large and very large comps whose CT liability is not higher than £10k (threshold to be apportioned for short APs)