Corporation tax

Question 1

Accounting period start dates

Answer 1

Trading commences
Source of chargeable income acquired
After last AP ends

Question 2

Accounting period ends at earliest of

Answer 2

12 months after the start
End of the period of account
Starts / ceases trading
Ceases to be UK resident

Question 3

Long Periods of Account

Answer 3

Split into separate accounting periods
Time apportion profits
Calculate capital allowances in two parts
Split property and NTLR on accruals basis
Allocate chargeable gains to period they arise + donations to period they are paid

Question 4

Capital allowances

Answer 4

Split into main pool, special rate pool and allowances
TWDV b/f
Additions (FYA?)
WDA
Disposal

Question 5

Small company payment

Answer 5

Pay 9 months and one day after the end of their accounting period

Question 6

Large company payment

Answer 6

Quarterly instalments on the 14th of month 7/10/13/16 of accounting period

Question 7

Very large company payment

Answer 7

Quarterly instalments on the 14th of month 3/6/9/12 of accounting period

Question 8

What makes a company large

Answer 8

Augmented profits > £1.5 million (scaled down by number of associated companies at end of the prior accounting period)
Not large if liability under £10,000
Not large in the preceding 12 months and has augmented profits under £10 million (scaled down)

Question 9

What makes a company very large

Answer 9

Augmented profits over £20 million
Not very large if liability under £10,000

Question 10

Short accounting periods instalment payments

Answer 10

The lower of 3 x CT/n and CT- (3 x CT/n)

Question 11

Indexation allowance

Answer 11

(RD - RI) / RI x Cost

Question 12

Order that disposals of shares owned by a company are matched

Answer 12

Any acquisitions made on the same day as the date of disposal
Made within the previous nine days
Any shares in the s.104 pool which consists of shares acquired after March 1982

Question 13

s.104 pool chargeable gain

Answer 13

Prior indexed cost + (prior indexed cost x index factor) + acquisition

Question 14

Bonus and rights issues in the s.104 pool

Answer 14

The acquisition of rights issue shares is an operative event so an indexed rise in the pool is calculated if it occurs before 2018, whereas a bonus issue is not an operative event

Question 15

Substantial shareholding exemption

Answer 15

Applies on the disposal of shares in one company (B) by another (A) if A has owned over 10% of the shares in B for a continuous 12 months in the 6 years preceding disposal
Applies for 5 years after disposal, so B must sell remaining shareholdings within this period in order that the gain on disposal would be exempt
Any capital gain arising is exempt from corporation tax
Any capital loss is not allowable

Question 16

Non-resident companies and chargeable gains

Answer 16

Subject to corporation tax on disposals of assets deriving at least 75% of their value from / (UK land and buildings)
Tax due within 60 days of completion of disposal

Question 17

Non-resident disposals of UK property

Answer 17

Only gain from April 2019 is taxable for non-residential property
Only gain from April 2015 is taxable for residential property

Question 18

Relief for R&D capital expenditure

Answer 18

Capital expenditure on R&D qualifies for a 100% First Year Allowance

Question 19

Qualifying R&D expenditure

Answer 19

Staff engaged on R&D
External staff provider who provides staff to be directly engaged on R&D
Consumable or transformable materials
Computer software / Data licenses / Cloud computing services
Power, water and fuel
Sub-contracted expenditure of the same nature

Question 20

SME R&D revenue expenditure relief

Answer 20

20% of qualifying R&D revenue expenditure incurred on or after 1 April 2024
Added to taxable income
Deducted from corporation tax liability

Question 21

Methods of double tax relief

Answer 21

Treaty relief
Unilateral relief
Expense relief

Question 22

Unilateral relief

Answer 22

The lower of the foreign and domestic tax suffered is deducted from tax payable

Question 23

Trading losses - continuing business

Answer 23

s.37 - Company records trading income of nil and can claim loss relief against total profits first for current period and then against prior periods
s.45A - Unrelieved trading losses are carried forward to be used in future accounting periods against total profits (as long as trade was ongoing in the period of relief)

Question 24

Trading losses - terminal business (s.37)

Answer 24

Relief used first against total profits of the same accounting period and then against prior periods

Question 25

Property losses

Answer 25

Automatically set against total profits before QCDs Excess carry forward against future total profits

Question 26

NTLR deficits

Answer 26

Relief against total profits Carry back relief against NTLR income of prior year Unused amounts carried forward against future total profits

Question 27

Capital losses

Answer 27

Automatically set against chargeable gains of the same accounting period Excess carried forward against next available chargeable gains

Question 28

Maximum carried forward loss relief

Answer 28

Deductions allowance of £5m + 50% of excess profits over £5m (after current period loss relief)

Question 29

Loss relief deadlines

Answer 29

Two years after the end of the accounting period

Question 30

Group loss relief ownership threshold

Answer 30

75% for subsidiaries and sub-subsidiaries E.g. If A owns 90% of B which owns 85% of C, they can transfer losses between themselves as 90% of 85% = 76.5%

Question 31

Maximum group relief for losses

Answer 31

The lower of - Company A's losses - Company B's TTP for the same period after deducting trading / property losses (current and b/f) and current NTLR deficits

Question 32

Maximum carried forward loss relief in a group

Answer 32

A loss group must share a single £5m group deductions allowance for each 12 month period

Question 33

Chargeable gains group ownership threshold

Answer 33

75% for subsidiaries and 50% for sub-subsidiaries

Question 34

Tax implications of a chargeable gains group

Answer 34

Nil Gain Nil Loss transfers for assets between companies Transfer of current period capital gains / losses between two companies, as long as they have the current period capital gains to use against any capital losses received Group rollover relief

Question 35

Degrouping charge conditions

Answer 35

A company leaves a gains group over 5 years of receiving an asset in a NGNL transfer It still owns the asset at the date it leaves the group

Question 36

Degrouping charge as a result of share disposal

Answer 36

Added to the share sales proceeds received by the parent A degrouping loss is deducted from the proceeds of the share sale