Additional Aspects of corporation Tax Flashcards
On what basis are employer pension contributions accounted for? (Companies)
PAID basis only
-Therefore if a contribution has been accrued at the end of the accounting period it must be disallowed
Is payment of a royalty on an IFA an allowable expense?
Yes
Is loss on the sale of an IFA an allowable expense?
Yes
Is amortization of an IFA an allowable expense?
Yes
EXCEPT GOODWILL
Is the receipt of a royalty payment on an IFA an allowable expense?
Not allowable = Taxable
Is profit on the sale of an IFA an allowable expense?
Not allowable = Taxable
Is re-valuing an IFA an allowable expense?
Not allowable = Taxable
Examples of R&D which qualify for additional tax relief? (4)
Qualifying revenue research and development expenditure
1) Consumable / Transformable materials
2) Computer Software
3) Power, Water, Fuel
4) Salaries of staff directly engaged on R&D work
How much qualifying R&D expenditure can SME (Small/medium enterprise) claim on revenue expenditure?
130%
- will be told when it is a SME
- If it is a subcontractor it is 65% * 130%
Additional R&D expenditure for large companies?
& what is it called?
May claim R&D expenditure credit of 13%
- 12% prior to april 2020
- Called RDEC (R&D expenditure credit)
How is double tax relief (DTF) calculated?
As the lower of:
1: UK Corporation tax attributable to overseas income
2: Overseas Tax Suffered
Qualifying donation and DTR
Offset in the most beneficial manner:
1) FIRST against U.K. income
2) THEN overseas income
If there is more than one source of overseas income, then the qualifying donations should be offset against the source suffering the lowest rate of overseas tax first
What happens to foreign dividends that are not exempt?
DTR is only available on underlying tax if the U.K. company owns at least 10%
1) get ride of WHY (withholding tax = boarder tax)
2) Remove UT (Underlying tax)
UT = (Dividend gross of WHT/ Distributable profits) * Overseas corp tax paid
