CT Flashcards
Mountain Ltd’s parent company has two other wholly owned subsidiaries, which it has owned for several years. Mountain Ltd prepared its first set of accounts for the six months to 31 January.
Select which of the following options correctly identifies the limits for Mountain Ltd for corporation tax payment purposes for the six months ended 31 January.
a) £375,000
b) £250,000
c) £750,000
d) £187,500
d) £187,500.
As Mountain Ltd’s parent company has two other wholly owned subsidiaries, there are four related 51% group companies: Parent + Mountain Ltd + two other subsidiaries. The revised limits become £375,000.
As Mountain Ltd has also prepared its accounts for a six month period, the limits need to be further prorated to account for the short accounting period:
£375,000 x 6/12 = £187,500.
Bone Ltd started to trade on 1 October 2019 and has no related 51% group companies. Bone Ltd had taxable total profits of £1,600,000 for its first year ended 30 September 2020 and £1,800,000 for its second year ended 30 September 2021. The company received no dividend income during either period.
State the due date for payment of the corporation tax for each accounting period.
a) Payment date for year ended 30 September 2020.
b) Payment date for year ended 30 September 2021.
Options:
By instalments
By 21 July 2021
a) By 1 July 2021.
b) By instalments.
A company does not have to pay tax by instalments in the first chargeable accounting period that it’s augmented profits exceed the limit provided its augmented profits ≤ £10,000,000.
Ainsley decides to start a restaurant business and forms a company, Ainsley Ltd, on 1 January 2021 through which he will trade. He opens a company bank account on 30 March 2021 into which he immediately deposits £100,000. He opens his first restaurant on 15 June 2021.
By which date should Ainsley Ltd inform HMRC that it has an obligation to file a corporation tax return?
a) 31 January 2022
b) 30 June 2021
c) 15 September 2021
d) 1 April 2021
b) 30 June 2021.
If a company starts to generate taxable total profits, including interest from a bank account, this constitutes the start of an accounting period. A company must notify HMRC of its chargeability to corporation tax within three months of start of the AP.
As a bank account for Ainsley Ltd was opened on 30 March 2021, this constitutes the start of the AP and Ainsley Ltd has three months to notify HMRC.
Blunt Ltd manufactures stationery and has prepared its corporation tax return for the year ended 31 March 2022.
Jim is a sole trader. He has been a retailer of stationery for many years and has just finished preparing his accounts to 31 December 2021.
What is the latest date for which Blunt Ltd and Jim must keep their business records for tax purposes?
Blunt Ltd
Jim
The correct answers are:
Blunt Ltd - 31 March 2028
Jim - 31 January 2028
A company must keep its records for six years from the end of the accounting period. An individual must keep his business records for five years from 31 January following the tax year.
Pilot Ltd prepares accounts to 30 April each year. Pilot Ltd has augmented profits below the limit for determining payment dates.
Year end Corporation tax due; £35,000
Date return filed; 12 Oct 2021
Date tax paid; 15 Dec 21
Pilot Ltd also submitted its previous corporation tax returns late.
What is Pilot Ltd’s maximum liability to penalties for the filing of its corporation tax return for the year ended 30 April 2020?
A. £200 fixed penalty and no tax-geared penalty.
B. £200 fixed penalty and 10% tax-geared penalty.
C. £1,000 fixed penalty and no tax-geared penalty.
D. £1,000 fixed penalty and 10% tax-geared penalty.
C. £1,000 fixed penalty and no tax-geared penalty.
The return should have been filed within 12 months of the period of account end, ie 30 April 2021. As the return is more than three months late, there would usually be a £200 fixed penalty. However as this is the third consecutive late return (persistent failure), this is increased to £1,000.
There is no tax-geared penalty as the return was submitted within 18 months of the end of return period (31 October 2021). The fact that there was tax unpaid at the 18 month point does not alone give rise to a late filing penalty.
How long do HMRC have to correct errors on a tax return?
9 months from filing
How long does a company have to correct its tax return?
12 months from due submission date
What is the submission date for a CT Return
12m from end of AP
