Corp Tax

Question 1

When are companies UK resident?

Answer 1

1. Incorp UK
2. ‘centrally managed and controlled’ UK (i.e. majority of directors)

Question 2

What counts as profit for working out whether a company needs to pay corp tax in instalments?

Answer 2

Dividends & groups (divided by no. group companies)

Question 3

Adjusting corp tax profits, differences to IT: Legal fees:
Share capital issue
Allowable or not?

Answer 3

Not allowable

(related to capital items)

Question 4

Adjusting corp tax profits, differences to IT: Legal fees:
Patents and TMs
Allowable or not?

Answer 4

Allowable

(The gov likes R&D)

Question 5

CT property losses treatment

Answer 5

1. Automatically offset IN FULL against total profit (before QCDs so might loose them)
2. The rest offset in future (can partial claim so can keep QCDs)
3. Group relief

Question 6

What basis is corp tax interest income?

Answer 6

ACCRUALS BASIS
(Same as property income for corp tax)

Question 7

What must a 75% group holding company also have?

Answer 7

75% share capital, distributable profits and winding up assets

Question 8

CT installments for short accounting periods

Answer 8

Amount
CT / (n/3)

i.e. simply 3 equal periods

(total CT & months in period)
(or total CT if lower, obviously)

Dates
Dates are the same, just might be less 3m periods in the middle

Question 9

SSE

Answer 9

No CGT due on disposal of shares where the company had a 10% holding in the company for a continious year in the 6y prior, and is a trading company

Question 10

Is there any R&D exemtion for a large company

Answer 10

YES

13% tax credit

Question 10

What to do with foreign dividends that the question tells you are in fact taxable?

Answer 10

1a. Always gross up for WHT (foreign tax on the border)
1b. Gross up for UT (Foreign CT) if we control 10%

2. DTR

Question 11

Company leaves group but still owns assets from group?

Answer 11

Degrouping charge
If NGNL transfers & 6y or less

Charge = gain that would have happened
(so index to date of transfer, not degrouping)
Proceeds = MV

If SSE then it’s simpler:
No charge, but cost also brought up to ‘proceeds’ (MV) at transfer

Question 12

Gains group

Answer 12

a. 75%
b. Parent needs 51%
c. One group only

Question 13

Gains group advantages

Answer 13

1. NGNL transfers (cost + index taken on)
2. Any gain/loss attributable to any company
3. Group-wide rollover relief

Question 14

What profits can you take from? current period losses

Answer 14

Trade
NTLR

EXCESS QCDs
EXCESS Property loss

Question 15

What is group relief available for? Prior period losses

Answer 15

EXCESS trading
EXCESS property
EXCESS NTLR

I.e. have to be used against surrendering company’s profits totally first, and QCDs are lost ofc

Question 16

What’s the max group relief that can be claimed?

Answer 16

Deductions allowance of £5m plus 50% of the excess profits over this amount FOR WHOLE GROUP

(As w. Cs, if not claimed then just 50% available can be used)