Chapter 5 - Payment of CT Flashcards Preview

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Flashcards in Chapter 5 - Payment of CT Deck (15)
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1

Intro

Large and very large companies pay their tax in instalments (QIPs), all other companies pay their CT 9 months and 1 day after the end of the AP

2

Large Companies

A company is large if the augmented profits for the AP exceed £1,500,000. This is prorated for periods shorter than 12 months.

3

Augmented Profits

TTP plus dividends received

4

Large Companies from April 2019

From 1 April 2019, a company is large if aug profits exceed £1.5 mil but are less than £20 mil (both apportioned if period is less than 12 months)

5

Very Large Companies

From 1 April 2019, a co is very large where aug profits are the period exceed £20 million

6

Note

Instalment payment rules for very large co's are excluded from the paper

7

Instalment Due Dates for Large Co's

Instalments are due as follows:
1) the first payment is due on the 14th day of month 7 counting from he start of the AP
2) subsequent payments are due 3 months after the previous instalment
3) final payment is due 3 months plus 14 days from the end of the AP

8

Late Payments

If an instalment is late, interest is payable from the date on which the instalment was due.
A different, higher, rate of interest will be due on any amounts still outstanding 9 months and 1 days after the end of the AP

9

Amounts Due By Instalments - Large Co's

The amount of each instalment is based on the corp tax liability of the current accounting period. Each instalment is calculated as:
3/n x estimated CT liability
n = number of months in the AP

10

Number of Instalments

For 12 months, all 4 instalments are 3/12 x estimated liability.
For 10 months, the first 3 are 3/10 x est. liab and the final is 1/10 x est. liab
For anything less than 10, there will only be 3 instalments, less than 7 will only have 2, less than 4 will have 1.

11

Groups - Augmented Profits

If a company is part of a group then divs from group companies are excluded from the augmented profit calc.
When establishing div income for aug profits, exclude divs received from 51% subsidiaries

12

51% Subsidiaries

Those where the receiving co is entitled to more than 50% of the profits, and holds more than 50% of ordinary share capital

13

Groups - Large Company Limit

If a co is part of a group, we divide the large go limit and v large co limit by the number of companies in the group (including the company itself).

14

Groups - 51% Subs

Where the co has 51% related group co's, the limits are divided by the number of related co's (including the company itself). This includes worldwide co's but excludes inactive/dormant and holding co's

15

Exceptions to Paying in Instalments

Where aug profits are less than £10 million, a large co doesn't have to pay QIPs if the co was not a large or very large co in the 12 months preceding the accounting period.
Also, large or very large co's who have a liability of less than £10,000 do not have to pay QIPs (prorated for short APs)