Corporation tax

Corporation tax

Limited company is required by law to pay corporation tax on their profit. The HM Revenue and Customs (HMRC) will send the CT600 forms to your company registered office address. This serves as reminder to your company directors to submit your corporation tax return, the CT600.

You company must assess your company profits and pay corporation tax to HMRC nine months after your accounting year ended.

Your must submit your corporation tax return, tax computation together with your company accounts no later than 12 months after the accounting year ended to state your final corporation tax bill.

Automatic late filing penalty will be issued to your company if failed to file the return on time with HMRC. There will also be penalty interests on any outstanding corporation tax amount.

Corporation tax for Large Company

A company with an accounting profit of more than £1.5 million is classified as large company by HMRC and therefore is required to pay its corporation tax in advance in four installments within a twelve-month period.

There is an exception. Where your company’s accounting profit exceeded £1.5 million but less than £10 million for the first time in your trading year, your company will not have to pay your corporation tax by installments.

Where there are associated companies or companies within a group, that £10 million threshold will be divided by one plus the number of associates at the end of the previous accounting period.

Accounting records

The onus is on your company to estimate your accounting profits for the purpose of making corporation tax payments. Therefore, it is important your company to have a proper accounting system in place to monitor your profits and business transactions.

Notify HMRC when your company profit is likely to exceed the thresholds. Start making quarterly installment payments. The unpaid installment payments carry penalty interest at a special rate imposed by HMRC, from the due date to the date of payment.

Oversight

There is no excuse for first time oversight. The HMRC will back date the penalty interest payable based on your final corporation tax return CT600 submitted.

Quarterly Instalments Payments

Installments are due at the intervals of three months commencing 6 months and 13 days from the start of your accounting period and culminating 3 months and 14 days from its end.

Therefore, for 12 month accounting period there will be 4 installments.

For a company with a 12 month accounting period starting on 1 January, Quarterly Installment Payments will be due on 14 July, 14 October, 14 January and 14 April.

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