Corporation Tax Flashcards
What is a large company?
One with augmented profits > £1,500,000 and < £20m
When is a large company not a large company?
If it has a tax liability of less than £10k
OR
It was not a large company in the preceding 12 months and it has augmented profits of not more than £10 million in the current accounting period
When are CT installments due for a large company?
14th of 7th month in accounting period, then every 3 months until the 14th day of the fourth month after the end of the accounting period
How do you work out the value of each instalment in a corporation tax period?
3 x CT/n where n is the number of months of the accounting period
When is a company very large?
When it’s augmented profits exceed £20m
Unless it’s tax liability is less than £10k
What would make a company exempt from CT on gain from sales of shares in another company?
If they were a substantial shareholder - I.e. a holding of at least 10% of the ordinary share capital + entitled to 10% of distributable profits and 10% of the assets on winding up for a continuous period of at least 12m during the six years prior to disposal
What are the restrictions on carried forward relief for CT?
£5m per 12m period
50% of excess profits over this amount
How far back can you use terminal loss relief?
36 months (prior to the year of the loss) on a LIFO basis
How do you deal with non-trade loan relationship deficits?
Take the NTLRD off the profit that same year
What is the order of losses out of trading profit, property losses, non-trading loan relationships
NTLRDs
Property
Trading losses
What is the difference between a group relief group and a chargeable gains group?
Group relief group is all 75% of the boss company
Chargeable gains is 75% one company to another and any company has to be 51% of the boss company
What is the corporation tax proforma?
THEO PAPHITIS is all about corporations and is a REPUBLICAN
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Trade income Property income Non-trade loan relationships Misc income Chargeable gains Total profits Qualifying charity donations Total taxable profits
What are the R&D expenditure rules for Small and Medium enterprise?
You get an enhanced deduction
An extra 130% in R&D revenue expenditure
Also 100% first year allowance on R&D
If you subcontract revenue expense, you only get 65% of the 130%
How many months are in a corporation tax year?
The first 12 months of the accounting period, no more
What happened with revenue expenditure for large corporations? Or also Smes that are doing R&D for a large company?
You work out 12% of the total qualifying R&D expense
You then add this to ttp, work out the ct at 19% and then take the same R&D credit amount of this tax figure
Should you add loss on a patent into trading profits or not?
Yes, assuming it is used in trade of the biz
What is Sse?
Substantial shareholding exemption
- if you have held 10% or more of shares in a trading company and you are a trading company AND
- you have held them for 12 months continuous or more with the last two years
Then you can deduct gains from selling these shares
How do CT instalments work if you have less than 12m?
Each instalment is 3 months and then there is a balancing payment when less than 3 months can make up the last instalment
When making consol accounts, and a loss is incurred in a sub, what do you put in the trading income bit?
Nil, you then can do loss relief first against the other income that sub has and then against other entities in the group
What is a substantial shareholding?
- a holding of at least 10% of the ordinary share capital….
- for a continuous period of TWELVE MONTHS during the 6 years preceding the disposal
What is the substantial shareholding exemption?
If a company disposes of shares in a trading company out of a substantial shareholding:
- any Capital gain arising is exempt from CT
- any capital loss is not allowable
What is a SME?
Less than 500 employees and
Either:
- annual turnover not exceeding 100m euros or
- annual balance sheet total not exceeding 86m euros
What key things do you need to remember for CT in the exam?
Interest receivable is NOT taxed for CT
Dividends received from unrelated UK companies are NOT taxed for CT
indexed gain is the gain that is taxed
No restriction for personal use on company capital allowances
Round index # up to 3dp
What order in a current period are deficits on NTLRs, trading losses and property business loans set against total profits?
1) deficit on NTLR
2) property business loan losses
3) trading losses of the current period
