Corporation Tax

Question 1

Calculation

Answer 1

Trading income - same as Sole traders but no appropriation of profit + no private use adjustments

Property income - same as individuals but :
Interest payable on loan to buy or improve key property is a non trading loan relationships expense

Non trading loan relationships

Chargeable gains

Total profits

(QCD paid)

Total taxable profits

Dividends received not deductible
Dividends paid not taxable

Question 2

Accounting periods

Answer 2

Starts :

• When company begins to trade or
• acquires a source of chargeable income

Ends earliest of :

12 months from start

Company begins or ceases to trade

Company ceases to be resident in uk

Date of period of account ends

Question 3

Long period

Answer 3

Trading profits - time apportion (12/15 3/15)

Property income - time apportioned

Non trading loan relationships - accruals basis

Capital gains - date of disposal

QCD - date of payment

Capital allowances - computed for period - long period = 2 calculations

Question 4

Admin : submission of return

Answer 4

12 months from end of POA

If long period - 18 months or less- two chargeable accounting periods - one return per period.

Deadline for both returns same date - triggered by end of long period as follows :

• POA > 12 months but less than or equal to 18 months . DEADLINE- twelve months after end of the POA
• POA > 18 months long. Deadline = thirty months from start of POA

Question 5

Admin submission of return penalties

Answer 5

Time from deadline :
1 day = £100
3 months = another £100
6 months = 10% unpaid tax 
12 months = another 10% unpaid tax 

If tax return late 3 times in a row each of £100 penalties increased to £500

Question 6

Admin : payment of corporation tax

Answer 6

Due date depends on augmented profits

9 months + 1 day after chargeable accounting period

In instalments if a large or very large company

LARGE:

First instalment due - 14th day of 7th month following the start of the accounting period

Subsequent instalments due at 3 month intervals

Final instalment due 14th day of 4th month following the end of the accounting period

Each instalment lower of:
3 x CT/n = CT - corp tax for period , N - no. Months in period

Or

Corporation tax for the accounting period

Question 7

Admin: large company

Answer 7

Augmented profits > 1,500,000

Aug profit = TTP + exempt ABGH distributions

(Exempt divs received from uk and overseas less than or equal to 50% subs)

The profit limit cut down by

• Short accounting periods - multiple by n/12
• related 51% group companies at end of previous AP (include companies related for just part of the period, EXCLUDE dormant companies)

Company is not large if :

• it has a tax liability of less than £10,000 or
• it was not a large company in the preceding 12 months and it has augmented profits of not more than 10m in the current accounting period

Question 8

Instalments for very large companies

Answer 8

Very large companies with accounting periods beginning on or after 1 April 2019

Payments due 4 months earlier than under the regime for large companies

Therefore instalments are due on the 14th day of the 3rd 6th 9th and 12th month from the start of a 12 month accounting period

For short periods starting 14th day 3rd month, then 3 month intervals until final instalment on 14th day after the end of the month preceding (before) the end of the accounting period

Question 9

Admin : very large company

Answer 9

Augmented profits > 20,000,000

Limit scaled down :

Short accounting period ( multiply by n/12)

Related 51% group companies at the end of the previous accounting period (divide by number of related companies)

Company will not be very large if tax liability < 10,000