Chapter 5 Payment of CT

Question 1

5.2 Large and very large companies

Answer 1

Where augmented profits exceed £1.5 million a company is considered large. Where the augmented profits exceed £20 million the company is considered very large. The thresholds are reduced where the accounting period is less than 12 months.

Question 2

5.3 Instalment due dates

Answer 2

Due dates for large companies are:
• The first payment is due on the 14th day of month seven counting from the start of the accounting period
• Subsequent payments are due three months after the previous instalment
• Final payment is due three months and 14 days from the end of the accounting period
Each instalment is calculated using the following formula:
3/n x estimated corporation tax liability, n is the number of months in the accounting period. For short accounting periods, sometimes there is less than 4 instalments.

Question 3

5.5 Very large companies – instalment dates

Answer 3

Rules came in for accounting periods beginning on or after 1 April 2019. The instalment dates for large companies are:
• The first payment is due on the 14th day of month three from the start of the accounting period
• Subsequent payments are three months after the previous instalment
• The final payment is due on the 14th day of the final month of the accounting period
Each instalment is also calculated using the following formula:
3/n x estimated corporation tax liability, where n is the number of months in the accounting period.

Question 4

5.6 Group companies – augmented profits

Answer 4

Dividends received from group companies are excluded in the calculated of augmented profits. This is for 51% subsidiary companies. For this purpose 51% subsidiaries are those in which the receiving company is beneficially entitled to more than 50% of the profits available for distribution and the assets available for distribution on event of winding up, as well as holding more than 50% share capital.
Where a company has 51% subsidiaries, we must divide the threshold by the total number of related companies. This is determined by the number of companies at the end of the immediately preceding accounting period for the company. Or at the start of the accounting period if there is no immediately preceding accounting period or that accounting period did not end immediately before the accounting period concerned.
The definition includes worldwide companies and dormant companies throughout the whole accounting period are ignored, as well as passive holding companies.

Question 5

5.8 Exceptions to paying by instalments

Answer 5

Where augmented profits do not exceed £10 million, a large company does not have to pay by instalments if in the previous period they were not a large company. The threshold is divided by the number of related 51% companies. Large or very large companies do not have to pay by instalments if their CT liability is less than £10,000. This threshold is reduced for short accounting periods.