Chapter 12 - Corporation tax – payment and administration Flashcards
Q: What is the augmented profits limit for FY23 for a 12-month accounting period?
A: £1,500,000.
Q: How is the augmented profits limit adjusted for shorter accounting periods?
A: It is reduced proportionately (e.g., £1,500,000 × months ÷ 12).
Q: When is corporation tax due if a company is not large?
A: 9 months and 1 day after the end of the accounting period.
Q: What are augmented profits?
A: Taxable total profits (TTP) + dividends received from non-group companies.
Q: How is the augmented profits limit adjusted for associated companies?
A: Divide the £1,500,000 limit by the number of associated companies.
Q: What qualifies a company as large for corporation tax purposes?
A: Augmented profits exceeding £1,500,000 (adjusted for associated companies and short periods).
Q: When must a large company pay corporation tax?
A: In four instalments on the 14th day of months 7, 10, 13, and 16 from the start of the accounting period.
Q: Under what conditions is a large company exempt from paying corporation tax in instalments?
A: If tax liability is <£10,000, or if the company is not large in the previous period and augmented profits ≤ £10m.
Q: What is the augmented profits limit for very large companies?
A: £20,000,000 (adjusted for short periods and associated companies).
Q: When must very large companies pay corporation tax?
A: In four instalments on the 14th of months 3, 6, 9, and 12 from the start of the accounting period.
Q: When must a company register for corporation tax with HMRC?
A: Within 3 months of the start of its first accounting period.
Q: When is the filing deadline for a corporation tax return?
A: 12 months after the end of the accounting period.
Q: How long does HMRC have to amend obvious errors in a corporation tax return?
A: 9 months from the actual filing date.
Q: How long does a company have to amend its corporation tax return?
A: 12 months from the due filing date.
Q: How long must corporation tax records be retained?
A: 6 years from the end of the accounting period.
Q: What are the Senior Accounting Officer’s (SAO) responsibilities for large companies?
A: Certify annually that accounting systems produce accurate tax information.
Q: How is interest on overpaid corporation tax treated for tax purposes?
A: It is taxable as non-trading loan income.
Q: How is interest on late-paid corporation tax treated for tax purposes?
A: It is deductible as a non-trading loan relationship expense.
Q: When does interest on late-paid corporation tax begin to accrue?
From the day after the due date until the tax is paid (inclusive).
Q: What is the maximum penalty for failing to keep adequate corporation tax records?
A: £3,000 per period (£500 for VAT records).
Q: What are associated companies, and why are they important for corporation tax?
A: Associated companies are companies under common control. They reduce the augmented profits limit by dividing it among the number of associated companies.
Q: What must companies include in their CT600 corporation tax return?
A: A self-assessment of tax liability, supporting tax computations, and accounts in iXBRL format.
Q: How is the £10m limit for exemption from quarterly instalments adjusted?
A: It is scaled down for short accounting periods and divided by the number of associated companies.
Q: When does HMRC’s enquiry period end for a corporation tax return filed on time?
A: 12 months after the actual filing date.
Q: When does HMRC’s enquiry period end for a late-filed corporation tax return?
A: By the quarter day following the 12-month anniversary of the filing date (quarter days: 31 Jan, 30 Apr, 31 Jul, 31 Oct).
Q: What is overpayment relief, and how long do companies have to claim it?
A: Overpayment relief allows companies to claim a refund for overpaid tax due to errors in their tax return. Claims must be made within 4 years of the end of the accounting period.
Q: What types of penalties can HMRC impose for corporation tax non-compliance?
A: Penalties for incorrect returns, failure to notify chargeability, and failure to keep adequate records.
Q: What is the maximum penalty for failing to appoint a Senior Accounting Officer (SAO) or submit an accurate SAO certificate?
A: £5,000 for each offense.
Q: When does repayment interest from HMRC start accruing?
A: From the later of the due date or the date of actual payment until the repayment date.
Q: What is the purpose of the augmented profits limit?
A: To determine whether a company pays corporation tax by instalments and whether it is classified as large or very large.
Q: What are the four payment dates for large companies paying corporation tax in instalments?
A: The 14th of months 7, 10, 13, and 16 from the start of the accounting period.
Q: What are the four payment dates for very large companies paying corporation tax in instalments?
A: The 14th of months 3, 6, 9, and 12 from the start of the accounting period.
Q: What are the record retention requirements for VAT under Making Tax Digital?
A: Some VAT records (e.g., VAT on sales) must be kept digitally using compatible software; others (e.g., import VAT certificates) must be kept in original form.
Q: What factors lead to higher penalties for late filing of corporation tax returns?
A: Persistent late filings (e.g., the third consecutive late return) or significant delays in submission.
Q: What must companies do within three months of starting their first accounting period?
A: Register for corporation tax with HMRC and state the start date of the accounting period.
Q: How are late payment penalties calculated for corporation tax?
A: Based on the length of the delay and whether it is the first, second, or third consecutive late submission.
Q: What is the penalty for failure to keep adequate PAYE records?
A: Up to £3,000 per tax year or accounting period.
Q: What is the threshold for a company to avoid being classified as very large for corporation tax instalments?
A: Augmented profits must be ≤ £20,000,000 (adjusted for short periods and associated companies).
Q: How does HMRC calculate penalties for third consecutive late corporation tax returns?
A: They impose higher penalties than for the first or second offenses.
Q: What happens if a company fails to file its CT600 return online?
A: The return is considered not filed, and penalties for late filing may apply.
Q: What is the penalty for failing to notify HMRC of a Senior Accounting Officer’s name?
A: £5,000.
Q: How do shorter accounting periods affect corporation tax payment limits?
A: Both the augmented profits limit and the £10m/£20m thresholds are scaled down in proportion to the length of the accounting period.
Q: Can HMRC correct arithmetical errors in a corporation tax return?
A: Yes, within 9 months of the actual filing date.
Q: What information must companies keep for corporation tax purposes?
A: Sales and purchase records, bank statements, cashbooks, and other relevant accounting records.
Q: What is the maximum penalty for failing to keep digital VAT records under Making Tax Digital?
A: £500 per tax period.
Q: When are tax payments due for a company with augmented profits below £1,500,000?
A: 9 months and 1 day after the end of the accounting period.
