Corp tax Flashcards
Companies that are resident in the U are taxed on
Their worldwide profits
Non resident companies are taxed on
UK income and gains if they are trading in the UK via an agency
No accounting period can
Exceed 12 months
Where shares in UK comanies are held as assets rather than investments
The dividends recieved will be treated as trading profits.
Pre trade expenditure
Is allowable up to 7 years previous
Property Business Income
Capital allowances on plant and machinery (not furniture) are taken into account.
There is a restriction on
The loan interest (mortgage) paid by a company to buy or improve a property. The loan relationship rules apply instead.
QCD
Qualifying charitable donations are deductible from total profits.
Donations to local charities which are incurred wholly and exclu are deducted.
Non trade intangible assets
If used for non trade purposes, the Dr and Cr net off. Cr is misc income, and then a claim can be made for all or part to be set off against total profits. Any Dr remaining can be carried forwards
Dividends recieved by a company are usually
Exempt
Augmented profits =
Total taxable total profts plus non group dividends received
Loan relationships
Income and expenses recorded in the accounts that relate to money debts (where a company had borrowed or lent money)
What is classed as non trading loan relationships?
Purchase invetsment property
Shares in another company
EMployee loan written off
Gains/losses ont he sale of loan stock or gov stock
Most interest income
What are the two treatments of intangibles?
The accounts basis, where it is for trade purposes and the debits and credits
Amortisation of goodwill is
Not deductible
On disposal the company is. taxed on the difference between proceeds and cost and is taxed as trade income or a non trade loss
The maximum income gain eligible for rollover is the proceeds less cost.
You can get rollover / reinvestment rrlief on intangibles as long as another intangble asset is purchased. in the prvious 12 months or 3 years post.
What is qualifying R&D?
Revenue expenditure on:
Staff costs including emp NI and pension contributions but excluding benefits.
If external workers are used only 65% of the amounts paid will qualify.
Consumables and software, including fuel power and water. NOT RENT.
What CA are claimed on R&D?
FYA
SME can obtain a X
186% deduction for qualifying R&D expenditure.
If a SME makes a trading loss it can claim a tax credit resulting in immediate repayment. The credit it:
10% of the lower of:
Unrelieved trading losses (after a deemed current year claim and actual carry back or group reliefs)
186% of qualifying R&D expenditure
CG - Companies get
Indexation allowance.
The indexation allowance is designed to
give companies relief against inflation over the period of ownershi
Indexation was frozen in
December 2017.
The indexation allowance cannot
increase or create a loss.
Share matching rules in companies
Aquisitions Same day
Aquisitions previous 9 days
Share pool FA 85 Pool
Substantial Shareholdings Exemption
Any gain on the disposal of all or part of a substatial shareholding is exempt and any loss is not allowable. Automatic and you cannot disapply.
What are the conditions for SSE?
A shareholding is substantial if:
Holds at least 10% of share capital
Is entitled to at least 10% of profits
Entitled to at least 10% of assets on widning up.
Interests of other group companies can be aggregated.
Shareholding must have been held for a continuous 12 month period during the 6 years prior to disposal.
12 months can include if the assets were held within a group
Company invested in must be a trading company or a holding company of a trading group at the time of disposal.
Replacement of business assets - Rollover relief
The only relief available to companies.
Indexed gain is deferred.
Goodwill is not a qualifying asset.
Claim for the relief must be made by the later of 4 years at the end of the accounting period that the old asset is disposed of or new asset purchased.
Marginal relief is
(upper limit - augmented profits) x 3/200 x (TTP / Aug Profits)
The purpose if to ease the transition from the small profits rate to the main rate of corporation tax.
Companies are asscoiated if
They are under common control i.e 50% shareholding.
companies that are only assiciated for part of a period are treated as being assiciated for the entire period.
Dormant companies do not count.
It is irrelevant where the company is resident.
A company must notify HMRC of the
beginning of it’s accounting period (when it starts to trade) and the beginning of any period that does not immediatly follow the end of a previous accounting period.
Must be submitted within 3 months from the relevant date.
If a company which is chargeable to tax but has not received a notice to file a tax return
It must give notice of chargeability within 12 months of the end of the accounting period.
When is a tax return due?
The Later of:
12 months after the period
If the period of account is more than 18 months then 30 months fromt he START of the period of account
3 months from the notice to file
Compliance checks
HMRC must give written notice of their intention to conduct a compliance check and must be given by the later of:
First anniversary of the due date if done on time.
The quarter day following the first anniversary of the actual filing date if the return is filed after the due date.
If the company amends the return. The window extends to the quarter day following the first anniversary of the date of amendment.
Amendments on return
If the compliance notice falls after the original window and within the extended window due to an amendment, the matetrs of enquiry can only be those relating to the amendment.
Companies must keep records for:
The latest of:
6 years from the end of the accounting period
The date any compliance checks are completed
The date after which compliance checks may not be commenced.
Penalties apply for
Late filing - £100. Rising to £200 after 3 months. These become £500 and £1,000 for the third consecutive late filing.
Errors
Failure to keep records (£3,000).
HMRC may correct obvious errors on a return within
9 months of the filing date.
Companies that are not large pay their CT
9 months and 1 day after the end of the accounting period
A large company is one whose X
Augmented profits exceed £1,500,000
The £1,500,000 threshold is reduced in two circumstances
Limit is scaled down for shorter periods
Limit is divided by the number of associated companies INCLUDING the company itself at the end of the previous accounting period
For 12 month periods 4 quarterly installements are due
in months 7, 10, 13, 16 and due on the 14th of each month.
Installments are based on the expected tax liability of the current period.
If the company has a shorter period
installments after the first installment are at 3 monthly intervals but the final installment is due on the 14th of the 4th month after the end of the accounting period.
How do you calculate interim payments?
3 x (CT/ n)
Transitional relief
Available for ocmpanies who become large in a period. No quarterly payments are due if either:
Augmented profits are less than 10m
The company was not big in the previous year.
Companies also do not have to pay by installments if
The prior year CT was less than £10,000 for a 12 month period.
CT - under and overpaid tax rates
Underpaid - 6.5%
Overpaid - 3%
Group payments on arrangements
Where more than one c ompany ina. group is liable to pay by installments one company can be allocated to make the payments on behalf of the group. This is because groups are often unlikely to know the tax liabiltiies until all of the groups accounts have been done.
