Corporation Tax - Lecture 8 Flashcards

1
Q

Corporation tax =

A

Tax of profits of corporations (ltd/plc) or unincorporated association (club/ political association)

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2
Q

UK resident company liable to CT on

A

Worldwide income

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3
Q

UK resident company =

A

One registered in UK or has central control and decision making carried out in UK

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4
Q

Dividends received from other companies

A

Not liable to CT

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5
Q

Dividends paid

A

Not allowable trading expense

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6
Q

Classical tax system

A
  • Company pays taxes on all profits whether distributed or not
  • Shareholders independent of company (taxed twice)
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7
Q

Imputation tax system

A

Some tax imputed to shareholders to reduce income tax payable

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8
Q

TTP (taxable total profit) =

A

Income + Gains - Charges

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9
Q

CAP length

A

Anything up to 12 months (cannot exceed)

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10
Q

CAP starts when (3)

A
  • Company begins to trade
  • Company acquires source chargeable income
  • Previous CAP ends
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11
Q

CAP ends when (4)

A
  • 12 months after starts
  • Date accounts made up to
  • Date company ceases to trade/ winds up
  • Date company ceases to be UK resident
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12
Q

Company’s rental income received and short lease premium income is assessable under

A

Property business profit

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13
Q

Expenses incurred as result renting property

A

Deductible

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14
Q

Interest paid on loan to purchase rental property

A

Not deducted as expense

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15
Q

Separate calculation needed

A

Each rental property

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16
Q

Interest income from trading vs non trading

A

Included in tax adjusted trading profit. (Non trading = TTP)

17
Q

Overseas income

A

Profits made by overseas branch where branch controlled by overseas management.

18
Q

If overseas branch controlled by UK management

A

Branch profits included in TTP

19
Q

Election for exclusion branch profits within TTP

A

Covers all branches, irrevocable decision

20
Q

Chargeable gains =

A

One-off gains on disposal capital assets

21
Q

Indexation allowance =

A

0.XXX x cost on acquisition/ enhancement

Inflation adjustment

22
Q

Indexation factor =

A

(RPI month disposal - RPI month acquisition/ enhancement) / RPI month acquisition/ enhancement

23
Q

Negative Indexation factor

A

Cannot happen, if RPI falls, 0

24
Q

Research and development basic treatment

A

Deduction of 230% R&D allowed (must be spending over £10,000)

25
Q

Research and development basic treatment > loss situation

A

Can claim refundable credit £14.50 every £100 R&D expenditure

26
Q

Research and development above the line

A

Credit 11% expenditure and offset against current year CT

27
Q

Double taxation relief

A

Credit the lower of:

  • Overseas tax suffered
  • UK corporation tax attributable to overseas income
28
Q

Payment quarterly installments

A

14th month for months 7, 10, 13, 16 accounting period. If taxable profits > £1.5m

29
Q

Criticisms of classical system (3)

A
  • Double taxation of earnings
  • Not neutral between equity and debt capital
  • Encourages retention of earnings > may inflate value of shares
30
Q

Full imputation =

A

All CT imputed

31
Q

Partial imputation =

A

Part of CT imputed