Corporation tax

Question 1

Who is chargeable to corporation tax?

Answer 1

Income and gains of a company

Question 2

Is company residence a factor in charging corporation tax?

Answer 2

Company is liable on its worldwide profits if it’s resident in the UK

Question 3

What makes a company resident in the UK?

Answer 3

It’s incorporated in the UK

Central management and control are exercised in the UK

Question 4

How long is a company’s accounting period?

Answer 4

12 months

Question 5

Are dividends allowable as a trading expense in the calculation of its trading income?

Answer 5

Not allowable

Question 6

Are private use adjustments present in capital allowance computations for companies?

Answer 6

No, they are never included

Question 7

What assumption is made regarding dividends?

Answer 7

All dividends received by a company are exempt

Question 8

What is the rate of corporation tax?

Answer 8

<£50k: TTP x 19%

£50k to £250k: TTP x 25% - marginal relief

> £250k: TTP x 25%

Question 9

What are augmented profits ?

Answer 9

Taxable total profits plus exempt ABGH distributions.

Compared with the limits of £1.5million and £20million

Limits are adjusted down for periods of less than 12 months.

Question 10

What are exempt AGBH distributions?

Answer 10

Includes dividends from UK and overseas companies other than those within 51% group.

Question 11

When is the due date for the CT of non-large companies?

Answer 11

Due date is 9 months and 1 day after the end of the chargeable accounting period.

Non large has augmented profits less than £1.5 mil

Question 12

When is the due date for the CT of large companies?

Answer 12

Large company has augmented profits between £1.5million and £20million

Installments due on 14th of months 7,10,13,16 of the accounting period

Question 13

When is the due date of CT for very large companies?

Answer 13

Companies with augmented profits exceeding £20million

Installments due on 14th of months 3,6,9,12 of the accounting period

Question 14

Is a Uk resident company chargeable on WW profits?

Answer 14

Yes

Question 15

How are charity donations handled?

Answer 15

Add back entire amount to trading income

Qualifying donation deducted from TTP

Question 16

Do there need to be any adjustments for private use with CT?

Answer 16

NO

Question 17

How are dividends handled when calculating trading income?

Answer 17

Deduct from trading income

0 when calculating TTP

Question 18

How is depreciation handled?

Answer 18

ALWAYS ADD BACK

Question 19

What is the formula for calculating marginal relief?

Answer 19

(U-A) x N/A x 3/200

U=250k
A=augmented profits
N=TTP

Question 20

If a company makes between £250k and £50k how is it taxed?

Answer 20

TTP x 25% - marginal relief = CT liability

Question 21

How are wages treated when calculating trading income?

Answer 21

Allowable - do nothing/deduct

Question 22

How is property income handled?

Answer 22

Remove from trading income

Add back in TTP

Question 23

How are profits on disposal treated?

Answer 23

Deducted from trading income

Calculate chargeable gain

Add back chargeable gain to TTP

Question 24

How is interest receivable dealt with?

Answer 24

Assume NTLR

Remove from trading income

Add back to TTP

Question 25

How is interest payable dealt with?

Answer 25

When non-trading Add to trading income Take away from interest receivable to calculate NTLR

Question 26

Are dividends from subsidiaries included in calculating augmented profits?

Answer 26

No so deduct

Question 27

How are bands adjusted when considering subsidiary companies?

Answer 27

Divide band by number of companies

Question 28

When can a company be said to have begun trading?

Answer 28

If they've opened a interest bearing bank account as they are gaining an income via interest