5. Corporation Tax Flashcards

1
Q

Within what time after the end of its financial accounting period must a company (1) pay any corporation tax which is owing, and (2) submit its tax return?

A

Tax due: Nine months and one day
Return due: Twelve months

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2
Q

What is the current corporation tax rate?

A

25%

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3
Q

What is the difference between the tax-status of dividends paid by a company and to a company?

A

Dividends paid out: not tax deductible
Dividends received: usually exempt from tax so not added to taxable income

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4
Q

What are the two ways in which a company can treat its trading losses?

A
  1. Set off all of loss against profits (before donations) from current or preceding accounting period
  2. If no profits, carry loss forward to offset against future profits (after donations) in a future accounting period
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5
Q

What is a close company?

A

Company resident in UK and controlled by either:

  1. Five or fewer shareholders, or
  2. Any number of directors who are also shareholders
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6
Q

What happens if a close company makes a loan to a shareholder who is also a director/employee and charges no interest on this? What is triggered if the loan is over £10,000?

A

A taxable benefit arises valued at the current official interest rate. If the loan is over £10,000, the benefit must be reported and taxed as earnings

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7
Q

If a close company makes a loan to a shareholder, even if interest is charged, what is the amount of the notional tax payment which must be deposited with HMRC and within what time limit should this payment be made?

A

The company must pay to HMRC 33.75% of the loan if not repaid within nine months and one day after the end of the accounting period in which the loan was made

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8
Q

Is the payment refunded when the loan is repaid or written off?

A

Yes

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9
Q

Is the notional payment paid to HMRC deductible by the company as an expense?

A

No

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