Chapter 4 Corporation tax self assessment Flashcards
4.1 Introduction
The due date for corporation tax depends on the size of the company. Small companies pay tax 9 month and 1 day from the end of the accounting period. Large companies pay tax in instalments. A company will submit a tax return giving details of income and expenses, this is filed online with tagged accounts.
4.2 Duty of notify chargeability
Companies must notify HMRC when their first accounting period begins or when they come back into charge to tax. The company must give three months written notice from the start of the accounting period and must state when the period began. A company must have a reasonable excuse for missing the deadline.
4.3 Notice to file a return
HMRC send out a CT603 which is a notice to send a corporation return for the period. Where a company has not received a notice, it must notify HMRC within 12 months of the end of the accounting period that it is chargeable to tax.
4.4 Filing a return
The CT600 is due 12 months from the end of the period of account or three months from receipt of the filing notice.
4.5 Long periods of account
Where a company draws accounts for more than 12 months, there is a single filing date which is 12 months from the end of the period of accounts. Two returns are submitted but the due date for filing both of these returns is the same.
4.6 Amendments
Both HMRC and the company can make amendments to the CT600. HMRC have nine months from the actual filing date and the company has 12 months from the due filing date. HMRC will amend obvious errors and the company may make minor amendments.
4.7 Enquiries
The selection of a return for enquiry is generally decided by HMRC’s risk and intelligence services. HMRC have two categories of enquiry, full enquiries covering the whole return and aspect enquires looking at particular items.
Enquiries can be avoided by the company making full disclosure to HMRC. The deadlines for HMRC to start an enquiry are:
• For individual companies and small groups, 12 months from the date the return is received, assuming the return is not late
• For large groups, 12 months from the due filing date, assuming the return is not late
• For all companies where the return is late, 12 months from the quarter day following the actual filing date. The quarter days are 31 Jan, 30 Apr, 31 July and 31 October
4.8 Duty to keep and preserve records
A company must keep records required to allow a correct and complete return for six years from the end of the period for which the company may be required to deliver a tax return. Where a company is required to deliver a return before the end of the six-year period, the records have to be kept beyond the six-year period until either:
• The date of an enquiry into a return is completed, or
• If there is no enquiry, the date HMRC can no longer enquiry into a return
The records kept must be all receipts and expenses in the period and all sales and purchases of goods.
4.9 Determinations
Determinations are issued by HMRC where a company fails to file a CT600, this allows HMRC to take proceedings against a company to obtain the corporation tax demanded on the determination. A determination can be issued up to three years from the due date for the return. This can only be superseded by an actual self-assessment made within the same time period or 12 months from the date of determination if later.
4.10 Discovery
HMRC can make an assessment on a company if they discover:
• An amount which ought to have been assessed has not been assessed
• An assessment is or has become excessive
• Relief has been given which is or has become excessive
The assessment is to be an amount which is considered necessary to make good the loss of tax. Where a company has delivered a return for an accounting period, no discovery assessment may be made for that period unless:
• The loss of tax was brought about carelessly or deliberately by or on behalf of the company
• The HMRC officer could not have reasonably have been expected on the basis of the information available to him at the material time to be aware of the facts giving rise to the loss of tax
The time limit for a discovery assessment depends on the reason for the incomplete disclosure of the company. The general rule is four years from the end of the AP. However the time limit for cases involving carelessness is six years and for a deliberate action is 20 years.
4.11 Overpaid tax
Where a company has paid an amount of tax but believes the tax was not due then a claim can be made for repayment or discharge of the amount. A claim must be made in writing.
