18. Tax admin. for a company

Question 1

How long does a company have to inform HMRC of their first accounting period?

Answer 1

3 months of the start of the period

Question 2

When do companies have to submit their tax return by?

Answer 2

The later of:

• 12 months after the end of the period
• 3 months after the issue of notice to file a return

Question 3

What are the late filing penalties for company tax returns?

Answer 3

Less than 3 months: £100 (or £500 if 3rd year running)
3 - 6 months: £200 (or £1,000 if 3rd year running)
6 - 12 months: £200 and 10% of tax outstanding at 6 months
More than 12 months: £200 and 20% of tax outstanding at 6 months.

Question 4

What time limit is there for amendments to returns by

a) HMRC
b) the company themselves

Answer 4

a) HMRC have the right to amend within 9 months of filing date
b) Company has right to amend within 12 months of the filing date

Question 5

What records must companies keep? (3)

Answer 5

• all receipts and expenses
• all goods purchased and sold
• all related supporting documents

Question 6

How long should records be kept?

What is the maximum fine for failing to adhere to this?

Answer 6

the latest of

• 6 years
• when a compliance check is complete
• when a compliance check can no longer be opened

£3000

Question 7

Payments of corporation tax are based upon what?

How is this calculated?

How does this effect deadlines

Answer 7

Augmented profits

Taxable trading profit X
Dividends received from non-group companies (not taxable) X
= Augmented profits

Then compared to profit threshold (£1,500,000)

AP > PT: pay in instalments on 14th of 7th, 10th, 13th and 16th month after start of period.
AP < PT: pay 9 months and 1 day after year end.

Question 8

How do 51% group companies affect corporation tax?

What companies can be classed as a 51% group company?

How does this effect augmented profits?

Answer 8

Divide the profit threshold by the number of 51% group companies.

Can be offseas
Can’t be dormant

Can’t include dividends in augmented profits

Question 9

If a 51% group company joins/leaves the group in the middle of a period, how is it treated?

Answer 9

Leaves: counted for that year.
Joins: counted in the following year.

Question 10

When do companies who’s augmented profits exceed profit threshold not have to pay in quarterly instalments? (2)

Answer 10

• when their corporation tax liability is less than £10,000
• was not classed a large company in previous year and augmented profits less than £10mil.
  NOTE: £10mil subject to time apportion and division for 51% companies.

Question 11

What is the formula for calculating quarterly instalment payments?

Answer 11

3/n x CT

n  = number of months
CT = liability

Question 12

At what rate is interest charged on late corp. tax payments?

At what rate is interest received on repayments from HMRC?

Answer 12

Interest charged at 3.25% annually (same as individuals)

Repayments at 0.5% annually (also same as individual taxpayer)

Question 13

Are additional penalty provisions the same as individuals?

Answer 13

Yes