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Advanced Taxation > Atx > Flashcards

Atx Flashcards

1
Q

AP definition & how long

A

Accounting period = period for which a charge to CT is made

Time = usually 12 months but can be less (cant be more)

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2
Q

Period of account more than 12 months

A

Then AP must be split into 1st 12 months, followed by balance

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3
Q

When does an AP Start?

A

A co. Starts to trade OR
Profits of a co. Become liable to CT
Or when previous AP ends

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4
Q

When does a co. Notify HMRC of its establishment?

A

Within 3 months of its first AP

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5
Q

When does a co. Notify HMRC of its chargeability to tax?

A

Within 12 months from end of its period of account

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6
Q

What is a co. Period of account?

A

Time for which it prepares it’s FS

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7
Q

When does an AP end ?

A

Earliest of 12 months after start date / end of period of account / when the co. Ceases to trade or goes under admin

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8
Q

CT Computation

A

TTP x 19%

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9
Q

FY runs from

A

1 april to 31 march

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10
Q

CT rate

A

19%

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11
Q

AP straddling 31 march

A

CT must be calculated for each year separately

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12
Q

Due date of CT (non large co.)

A

9 months and 1 day after end of AP

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13
Q

Due date of CT (large co.)

A

Quarterly instalment payments

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14
Q

How is CT paid ?

A

Electronically

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15
Q

Definition of a large Co.

A

Aug Profits are more than 1.5 milli but less than 20 milli

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16
Q

What are augmented profits

A

TTP +dividend from non group companies

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17
Q

Dividends received impact on CT

A

They are exempt from CT but impact if a comoany is determined large or not

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18
Q

1.5 milli threshold to determine whether a co. Is large or not

A

Short AP - time apportion

Related 51% group co. - Divide by no. Of co.

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19
Q

Related 51% group co. Includes and excludes

A

Includes - overseas resident companies

Excludes - dormant companies & non trading holding companies

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20
Q

51% group companies during APs

A

Companies joining during AP are included from the following AP

Companies leaving during AP are included until the AP ends

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21
Q

Consequences of 51% group companies

A

1.5milli threshold is divided by total number of 51% group co.

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22
Q

When are quarterly instalments for large companies paid

A

4 instalments by 14 days of months 7, 10, 13 and 16 following start of the AP

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23
Q

Exception to instalments for large Co.

A

Co. Whose liabilities for the year is below 10k

They became large during the AP and werent large the previous AP

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24
Q

Short AP’s for large companies - instalments

A

1st instalment due 14th day of 7th month
Subsequent at 3 monthly intervals
For short periods AP, all the remainder is paid on date of last instalment

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25
Q

Amount of instalments for short AP

A

(Estimated CT liability for AP) x (n/length of AP)

N = 3 months or however many months fit into the AP

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26
Q

Late payment interest dates

A

Runs from normal due date on any tax paid late

To date of payment made

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27
Q

Group payment arrangements are available by

A

One group company paying quarterly instalments of CT on behalf of the group
(But each co. Must prepare a separate corporation tax computation)

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28
Q

Impact of taxation on cash flow of a business

A

Co. Need to take account of their tax payments when considering their cash flow forecasts for the year

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29
Q

Self assessment for corp taxpayers

A

Calc their own CT liability for AP
Submit self assessment of CT within 12 months after end of P of A
Pay any CT withing 9 months + 1 day or quarterly

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30
Q

Self assessment tax return form must be submitted by

A

THE LATER OF
12 months after the end of AP
3 months after the issue of the notice to file a return

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31
Q

Self assessment tax return MUST

A

Contain all info required to calculate the companys TTP

Include self assessment of amount of CT payable for that AP

Be submitted online

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32
Q

Determination assessments reason

A

HMRC can issue a determination assessment to prevent co. Delaying submission of a return

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33
Q

What is a determination assessment

A

Its treated as a self assessment by the company and theres no right of appeal against the determination assessment

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34
Q

When can a determination assessment be filed ?

A

At any time withing three years of the filing date

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35
Q

What records should a company keep ?

A

All receipts and expenses
All goods purchased and sold
All supporting docs related to transactions

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36
Q

How long should records be retained until ?

A

Until later of
6 yrs after end of AP
Date on which compliance check is complete
Date on which its impossible to start a compliance check

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37
Q

If records arent kept then

A

A penalty may be charged

Maximum penalty is only likely to be imposted in the most serious cases

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38
Q

Amendments to the return

A

A company can amend the return within 12 months of filing

39
Q

Errors to the return

A

HMRC may correct any obvious errors or mistakes within 9 months of the return being filed

40
Q

Errors to the return at a later date

A

The company can make a claim for overpayment relief to recover any overpayments

41
Q

Claim for overpayment relief

A

Claim can be made in respect of errors made and mistakes from misunderstanding laws
Claim must be made within 4 yrs of AP it relates to

42
Q

Compliance checks into returns can be made as a result of

A

Suspicion income is undeclared
Suspicion deductions are incorrectly claimed
Being part of random selection proces

43
Q

Compliance check written notice

A

If return filed on time - notice must be issued within 12 months
If return filed late, on 31/01, 30/04, 31/07 or 31/10 following date of delivery

44
Q

Compliance check procedure

A

HMRC can demand docs, accounts, other written particulars and full answers to specific questions

45
Q

Compliance check info timeframe

A

Company has 30 days to comply with the request and 30 days to appeal in writing

46
Q

Discovery assessments (an additional assessment)

A

Discover assessment can be raised at a later date and its restricted unless loss of CT was brought about carelessly or deliberately by the company

47
Q

Time limit for discover assessment

A

Basic error - 4yrs
Careless error - 6yrs
Deliberate error - 20yrs

48
Q

Penalties for late filing of CT

A

Within 3 months - fixed £100

More than 3 months - fixed £200

49
Q

Additional penalties

A

6-12 months after filing - additonal 10%
More than 12 months - additional 20%

Failure to keep records - up to £3000 per AP

50
Q

Pro forma computation

A

Name of Co.
Corporation tax computation, for AP ended

Trading profit
Interest income
Property income
Misc income
Net chargeable gains

Total profit
Less QCD

TTP

51
Q

Trading Profits differences

A

Any interest receivable/ payable is included in TP

Dividends payables arent an allowable Trading expense

Enhanced deductions are available for R&D if conditions are satisfied

52
Q

AIA time & max

A

The max AIA is £1million for a 12month accounting period

53
Q

AIA and related companies

A

A group of Co. Are related then only one AIA is entitled but the group can choose how to split it

54
Q

AIA allocation

A

Doesnt have to be divided equally between them, all can be given to one group

55
Q

Companies owned by the same individuals are related if

A

Theyre engaged in same activities

Or on same premises

56
Q

Unrelated companies owned by the same individual

A

Are each entitled to the full AIA

57
Q

SBAs allowance

A

Eligible for an annual 3% straight line

58
Q

SBA qualifying cost

A

New Buildings including offices, retail and wholesale premises, factories, warehouse, hotels & carehomes

59
Q

SBA qualifying use

A

Includes use in the trade or in property letting (time apportioned if its use is part way through a period)

60
Q

SBA (structure and building allowance)

Non qualifying costs

A

Include land, legal fees, stamp duty, land tax or R & M

61
Q

Pooling system for SBA

A

No pooling system, kept separate from AIA

62
Q

SBA Asset Sold

A

Buyer takes over the remaining useful life and the 3% is apportioned

63
Q

Expenses related to borrowing money

A

Interest paid on overdrafts, bank loans
Other costs such as arrangement fees
Write off of impaired debt from lending money

64
Q

Income received from lending money

A

Interest income including interest from bank deposits, loads and g.ment stocks)

65
Q

Income from borrowing - trade purposes

A

Only applicable to banks that make money on loans

66
Q

Expenses from loans for trade purposes

A

Interest payables/expense related to

Loan taken out for P&M, to purchase property, loan or overdraft too fund daily operations

67
Q

Income from loan, non trade purposes

A

Interest receivable on bank accounts, interest receivable on investments and interest from HMRC

68
Q

Expense from loan, non trade purposes

A

Interest payable / expense related to a loan to purchase a property
A loan to acquire shares of another company
Interest payable to HMRC

69
Q

Tax treatment - trade purpose

A

Amounts that are for trade purposes are included in trading profits part of TTP

70
Q

Tax treatment - non trade purposes

A

Amounts for non trade are included in the calculation of TTP

71
Q

Overseas income

A

Any overseas income can be included inTTP
Dividens from overseas are exempt from CT
Overseas profits are included

72
Q

Property income

A

A co. Is always taxed on an accrual basis

73
Q

Miscellaneous income

A

Its uncommon, but royalties can be received, if for trade purposes included in trade profits.
Non trade purposes e.g. held as investments

74
Q

QCD

A

Small local donation allowed as a trade expense

Other donations are allowable deduction from total profits

75
Q

Long period of account

A

A company requires permission from registrar of companies if it wishes to extend its period of account beyond 12 months (cant be longer than 18 months)

76
Q

Period of account for CT

A

Must be prepared with two CT computations and two separate payment dates

77
Q

Indexation allowance availability

A

Available for assets acquired prior to December 2017

78
Q

Rules for IA

A

Cost of asset x indexation factor (from month of purchase to month of disposal)

79
Q

Rollover relief

A

Can be claimed on gains of disposals of QBAs where proceeds are reinvested in new QBAs eithin time period (12 months before disposal to 3 yrs after disposal)

80
Q

Rollover relief rules

A

Goodwill doesnt qualify for rollover relief and is applied to the gain after deducting IA

If all net proceeds from sale are reinvested then the whole gain can be deferred.

If only part are reinvested then the gain left must be lower of gain / proceeds not reinvested

81
Q

Capital losses

A

All capital losses must be netted off against chargeable gains arising in the same AP.
Any net gain is chargeable as TTP
Net capital losses are carried forward

82
Q

Chargeable gain calculations

A

Calculate chargeable gainsm / capital loss arising on disposal of an asset separately
Calculate total net chargeable gains (less capital losses)
Deduct capital losses brought forward = total net chargeable gains
Include in TTP computation

83
Q

Annual exempt amount (AEA)

A

None

84
Q

Disposal of shares should be matched as follows

A

Acquisitions on same day as disposal
Acquisitons during nine days before disposals
Acquisitions in share pool

85
Q

Share pool for companies keeps records of

A

Number of shares acquired and sold
Cost of shares
Indexed cost of shares

86
Q

Substantial shareholding exemption

A

On disposal by a company of shares out of a substantial shareholding in another company
Gains = exempt
Losses = not allowable

87
Q

A substantial shareholding is defined as a holding

A

Of > 10%

Owned for atleast 12 months in 6 yrs before disposal

88
Q

Shares owned for less than 12 months out of the previous 6yrs

A

Ownership can be satisifed if

Shares being disposed of are in a new company
New company received assets from another 75% group company
Assets transferred were held and used in the trade of another group company for 12 months before the transfer

89
Q

Diff between individuals and companies

Gains

A

I - Capital gains tax, separate from income

C - Include in TTP and tax with income

90
Q

Diff between individuals and companies

AEA

A

I - yes

C - no

91
Q

Diff between individuals and companies

Indexation allowance

A

I - No

C-yes

92
Q

Diff between individuals and companies

Matching rules for shares

A

I - shares purchased same days, following 30 days, share pool
C - shares purchased same days, previous 9 days, share pool

93
Q

Scheme for SME’s

A

Enhanced relief is available for qualifying R&D
Can deduct an additional 130% of qualifying expenditure for tax purposes.
If deduction creates a loss it may be surrended in return for cash from HMRC of 14.5% of surrendered amount.

94
Q

Qualifying R&D expensiture must be revenue expenditure that is relevant to a companys trade

A 
Staffing costs for staff working in R&D
Agency staff for R&D
Materials, water fuel and power for R&D
Software directly used in R&D
Payments to subcontracters

Advanced Taxation (1 decks)

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