Chapter 5 - Payment of CT Flashcards
Intro
Large and very large companies pay their tax in instalments (QIPs), all other companies pay their CT 9 months and 1 day after the end of the AP
Large Companies
A company is large if the augmented profits for the AP exceed £1,500,000. This is prorated for periods shorter than 12 months.
Augmented Profits
TTP plus dividends received
Large Companies from April 2019
From 1 April 2019, a company is large if aug profits exceed £1.5 mil but are less than £20 mil (both apportioned if period is less than 12 months)
Very Large Companies
From 1 April 2019, a co is very large where aug profits are the period exceed £20 million
Note
Instalment payment rules for very large co’s are excluded from the paper
Instalment Due Dates for Large Co’s
Instalments are due as follows:
1) the first payment is due on the 14th day of month 7 counting from he start of the AP
2) subsequent payments are due 3 months after the previous instalment
3) final payment is due 3 months plus 14 days from the end of the AP
Late Payments
If an instalment is late, interest is payable from the date on which the instalment was due.
A different, higher, rate of interest will be due on any amounts still outstanding 9 months and 1 days after the end of the AP
Amounts Due By Instalments - Large Co’s
The amount of each instalment is based on the corp tax liability of the current accounting period. Each instalment is calculated as:
3/n x estimated CT liability
n = number of months in the AP
Number of Instalments
For 12 months, all 4 instalments are 3/12 x estimated liability.
For 10 months, the first 3 are 3/10 x est. liab and the final is 1/10 x est. liab
For anything less than 10, there will only be 3 instalments, less than 7 will only have 2, less than 4 will have 1.
Groups - Augmented Profits
If a company is part of a group then divs from group companies are excluded from the augmented profit calc.
When establishing div income for aug profits, exclude divs received from 51% subsidiaries
51% Subsidiaries
Those where the receiving co is entitled to more than 50% of the profits, and holds more than 50% of ordinary share capital
Groups - Large Company Limit
If a co is part of a group, we divide the large go limit and v large co limit by the number of companies in the group (including the company itself).
Groups - 51% Subs
Where the co has 51% related group co’s, the limits are divided by the number of related co’s (including the company itself). This includes worldwide co’s but excludes inactive/dormant and holding co’s
Exceptions to Paying in Instalments
Where aug profits are less than £10 million, a large co doesn’t have to pay QIPs if the co was not a large or very large co in the 12 months preceding the accounting period.
Also, large or very large co’s who have a liability of less than £10,000 do not have to pay QIPs (prorated for short APs)
