Many growing businesses and small companies viewed corporation taxes as just one of the company compliance cost and must be paid to HM Revenue and Customs nine months after the accounting year end.
Businesses must start to consider the tax implications on all aspects of the business decisions because poor tax planning will have adverse effect on the business cash flow.
What is corporation tax?
Corporation tax is payable by companies on their profits. The tax is charged on the profits of the company and this includes income from all sources including capital gains. The basis of assessment of corporation tax is the accounting period of the company. Tax is calculated by reference to profits made in each accounting period. An accounting period is normally twelve months ending with the company’s accounting year end date; the date to which the company accounts are made up.
For example, Best Ever Limited accounting year end is 31 March 2008. The company will prepare its accounts to 31 March 2008 and compute its corporation tax for the period ended 31 March 2008.
Large Companies
Large companies are obliged to
account for corporation tax on quarterly basis to the HM Revenue and Customs.
A company is classified as large when it has an accounting profit of more than £1.5 million in an accounting period. Companies fall under this category must pay their corporation tax in advance in four installments within a twelve month period.
However, there is an exception to help growing business. Where the company’s profit has exceeded the £1.5 million threshold but less than £10 million for the first time in its trading year, the company is not required to pay its corporation tax by quarterly installments.
The onus is on the companies to estimate their accounting profit for the purpose of making corporation tax payments.
Canterbury Accountancy offer taxation services to companies require assistance in calculating their corporation tax liability and preparation of the corporation tax return called CT600. It is important to note that the return must be submitted to the revenue office twelve months from the end of the accounting period.
Discuss your companies’ taxation and accounting requirements with one of our chartered accountants.
Canterbury Accountancy - UK London Chartered Accountants - Good tax planning result in paying less tax
