Small Business Tax Advice: Corporation Tax Self-Assessment.

Steven Glicher & Co Accountants deal with many businesses large and small.

We always give the most appropriate and relevant advice to all of our clients, and try to make this advice clear and concise and express it in way that people will understand. What we have found is that the one tax issue that causes the most confusion especially amongst small businesses is corporation tax self- assessment. So we’ve drawn up a short schedule of small business tax advice which outlines all the salient points regarding corporation tax self-assessment which we hope you’ll find useful.

Registration.

In order to avoid the risk of incurring any penalties, all companies and businesses should notify HM Revenue & Customs within 3 months of commencing trading. This is normally done by completing form CT41G, but it is also possible to provide this information online if this is more convenient.

Filing dates of returns.

The corporation tax self-assessment return (CTSA) must be submitted to HMRC along with the accounts and tax computations. It’s worth noting that it is possible to file all this information online through the HMRC website. The filing deadline for the CTSA return (plus accounts and tax computations) is normally 12 months from the end of the accounting period. However, should the return be filed late businesses could be subject to the following penalties:

  • Up to 3 months late – £100, (increasing to £500 for a third consecutive late return).
  • Over 3 months late – £200, (increased to £1000 for a third consecutive late return).
  • 6 to 12 months late – Extra tax geared penalty of 10% of the unpaid tax.
  • More than 12 months late – 20% of the unpaid tax.

Payment dates for Corporation Tax.

The payment dates for corporation tax for small companies is usually 9 months and 1 day after the end of the accounting period. However, larger companies, that is those with in excess of £1.5 million of profits, pay under 4 quarterly instalments that commences 6 months into the accounting period. This means that these larger companies must use an estimate of their eventual tax liability for the year. Companies that form a group may fall into the definition of “large” and be required to pay corporation tax by instalments. Interest runs on late payment.

CT61 Returns.

Companies are also required to deduct income tax from some payments, like interest payments, and pay this over to HMRC within 14 days of a quarter-end. Quarters end on 31 March, 30 June, 30 September and 31 December, with an extra return in the period up to the accounting period end if it does not coincide with these dates.

Time limits for correcting and enquiring into tax returns.

HMRC generally have a time-slot of 9 months after a return or amendment is filed to correct any obvious error like an arithmetical mistakes. The company can amend the return within 12 months of the filing date.

In relation to enquires, returns can either be selected at random or for a reason: HMRC are under no obligation to say which. HMRC can pick up these random selections at any time within 12 months of the date the return is filed, assuming the return was either filed early or on time: if the return was filed late the date is 12 months from when it was filed plus the period to the next quarter day (31 Jan, 30 April, 31 July, 31 October). Where there is an amendment, the time limit changes to 12 months from the date of the amendment plus the period to the next quarter day.

However, HMRC can make a discovery assessment if there is a loss of tax due to fraud or negligence, or if the facts giving rise to the loss of tax only became known to HMRC after the time limit for opening an enquiry had expired and they could not reasonably have been expected to be aware of the facts from the information made available to them at the time. The normal time limit for discovery assessments is 6 years after the end of the accounting period but is increased to 20 years in cases of fraud or neglect.

Records.

Businesses must normally keep records in support of the return for 6 years from the end of the accounting period. The penalty for non-compliance can be as much as £3000 for each accounting period.

How can Steven Glicher & Co accountants help you?

We can assist you with all aspects of corporation tax compliance and planning. For further information about corporation tax self-assessment or any other small business tax advice, please contact Steven Glicher on 0161 485 8007.

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