Chapter 1 - Intro to CT Flashcards Preview

Paper 2: Corporate Tax & VAT > Chapter 1 - Intro to CT > Flashcards

Flashcards in Chapter 1 - Intro to CT Deck (18)
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1

Corp Tax

Charged on any corporate body: limited and unlimited companies and unincorporated associations (members' clubs and political associations)

2

Company

A co is any body which has been incorporated. Will be limited (ltd) or public (plc). Must be registered at Companies House

3

Corp Tax

Charged on companies income and chargeable gains (profits). Co's will have trading profit, non trade profit, property income and capital gains

4

Residence

A co is UK res if it's incorporated here. If incorporated abroad, they are still UK res if their place of central management and control is in the UK. UK res co's are liable to tax on their worldwide income and gains

5

Accounting Periods

CT is charged on each accounting period (AP/CAP). Usually the period for which a company makes up its accounts.

6

Accounting Period Beginning

Begins at the earliest of:
- Commencement of trading
- Acquisition of a cource of income
- Immediately after the end of the previous accounting period.

7

Accounting Period End

Ends at the earliest of:
- Cessation or commencement of trading
- The company becoming dormant (no source of income)
- End of the period of account
- 12 months after the account period began

8

Accounting Period Note

An AP can never exceed 12 months

9

Proforma CT Calculation

Trading income
Adjusted profit before CAs: x
Less: CAs (x)
Trade profit: x

Other income
Non-trade profit (loan relationships) x
UK property business x
Overseas property business x
Net chargeable gains x
Less: QCD (donations) (x)

Total taxable profits x

CT liability (TTP x tax rate) = x

10

CT Computation

PBT x
Add back: disallowables x
Deduct: income not taxed as trading income (x)
Tax adjusted profit before CAs x
Deduct: CAs (x)
Trade profit x

11

CT Comp Notes

In adding back disallowables, there are no adjustments for private expenditure by a company.

12

CT Comp - Interest

Interest expenses incurred on a non-trading loan must be added back.
Interest payable on trading loans is allowed as a deduction.
Interest receivable will be treated as non-trade profits usually

13

CT Comp - Dividends

Co's do not pay tax (normally) on divs received, nor do they receive tax relief on divs paid

14

CT Comp - Gains

Co's pay CT on net chargeable gains. Indexation allowance is deducted in arriving at chargeable gains.

15

Indexation

Calculation is (RPI at date of disposal - RPI at date of expenditure incurred)/RPI at date of expenditure incurred
(RD - RI)/RI
Round to 3 decimal places

16

Further Provisions

51% groups of companies and companies under common control are treated as one businesses for AIA purposes ie only one AIA between them

17

Common Control

Companies are controlled by the same person and the companies are related to one and another.
Related:
- their businesses are carried on from the same place; or
- more than 50% of the turnover of each of the co's is derived from the same economic activities

18

Note

Look at the proformas in the joggers/study manual