Corporation Tax

Question 1

pro forma for calculating total taxable profits?

Answer 1

trading income xxx
add: property income xxx
add: NTLR xxx
add: miscellaneous income xxx
add: chargeable gains xxx

equals: total profits xxx

less: qualifying donations (xxx)

equals: total taxable profits xxx

Question 2

trading income?

Answer 2

adjusted trading profits less capital allowances

Question 3

property income?

Answer 3

income from UK & O/S property

Question 4

NTLR?

Answer 4

non-trade interest receivable less non-trade interest payable

Question 5

miscellaneous income?

Answer 5

income not included elsewhere

Question 6

chargeable gains?

Answer 6

chargeable gains less capital losses

Question 7

qualifying donations?

Answer 7

national charity donations

QCDs

Question 8

when are bonuses recognised for CT?

Answer 8

recognised on accrual basis unless payment isn’t made within 9 months of year end

if payment made over 9 months after year end - paid basis

Question 9

do you adjust for private use of a vehicle for CT?

Answer 9

no

15% disallowance for pollutant vehicles still applies

Question 10

when are gifts to customers disallowed?

Answer 10

• over £50 per person
• food / drink
• tobacco
• vouchers

Question 11

are charitable donations recognised as part of tax adjusted trading profits?

Answer 11

no

recognised under QCD to form TTP

Question 12

are SBAs different for CT?

Answer 12

no

same 3% on commercial buildings/structures

Question 13

how long can a period be for capital allowances?

Answer 13

12 months max

Question 14

can each company within a group have an AIA?

Answer 14

no

one group gets one AIA

Question 15

two extra allowances for capital allowances for CT?

Answer 15

• full expensing in MP
• 50% FYA in SRP

Question 16

full expensing in main pool?

Answer 16

100% allowance on new (unused) assets

balancing charge on disposal arises

no limit / cap, unlike AIA

Question 17

50% FYA in SRP?

Answer 17

50% write down on new SRP assets

remaining balance is subject to 6% WDA in following period

Question 18

should you claim AIA first or full expensing?

Answer 18

claim AIA first if applicable

as balancing charge arises on disposal of full expensed assets

Question 19

should you claim AIA first or 50% FYA?

Answer 19

claim AIA first, as it gives 100% relief

Question 20

do fully expensing / 50% FYA apply to second hand assets?

Answer 20

no

Question 21

do fully expensing / 50% FYA apply to cars?

Answer 21

no

Question 22

are super deductions still occurring for CT?

Answer 22

no

Question 23

what balance is used on disposals for capital allowances?

Answer 23

lower of:
- cost
- proceeds

Question 24

how are disposals handled for full expensed MP assets?

Answer 24

it was not allocated to the main pool on acquisition

so the disposal is deducted to create a balancing charge directly in the allowances column

e.g., disposal of 60,000, deduct 60,000 from total allowances

Question 25

how are disposals handled for 50% FYA SRP assets?

Answer 25

balancing charge on lower of cost and net proceeds * 50% e.g., disposed of for 60,000, balancing charge of 30,000

Question 26

can you claim AIA on second hand assets?

Answer 26

yes

Question 27

can you claim AIA on cars?

Answer 27

no

Question 28

does FYA or AIA apply to cars?

Answer 28

no

Question 29

where there's a period of account longer than 12 months...

Answer 29

it must be split into two APs - first 12 months - remainder of the period of account

Question 30

how is trading profits allocated across two APs?

Answer 30

time apportion

Question 31

how is capital allowances allocated across two APs?

Answer 31

separate each calculation for each accounting period prorate AIA & WDAs if AP is less than 12 months two separate CT computations are made

Question 32

how is property income allocated across two APs?

Answer 32

time apportioned

Question 33

how is NTLR allocated across two APs?

Answer 33

accruals basis

Question 34

how is chargeable gains allocated across two APs?

Answer 34

date of disposal

Question 35

how is QCD allocated across two APs?

Answer 35

date of charitable donation made

Question 36

how is the CT tax rate determined?

Answer 36

through augmented profits

Question 37

what is taxed to calculate CT liability?

Answer 37

ttp is taxed at the relevant tax rate

Question 38

augmented profits?

Answer 38

TTP + exempt ABGH distributions (dividends)

Question 39

exempt ABGH distributions?

Answer 39

dividends received by the company, other than: - a dividend from associated companies - a foreign dividend (ensure it is not grossed up)

Question 40

CT rate%?

Answer 40

below 50,000 AP = 19% 50,000-250,000 AP = 25% * marginal rate above 250,000 AP = 25%

Question 41

marginal relief for when AP is between 50,000 and 250,000?

Answer 41

deduct marginal relief from CT of 25% from companies w/ AP between 50,000 & 250,000

Question 42

marginal relief calculation?

Answer 42

(u-a) * (n/a) * SF u = upper limit (250,000) a = augmented profits n = TTP SF = standard fraction (3/200)

Question 43

effective tax rate?

Answer 43

when trying to quantify tax saving from relieving losses, an ETR of 26.5% can be used to calculate CT for companies with profits between 50,000 and 250,000 (only works where AP = TTP i.e., no dividends)

Question 44

how are short accounting periods handled?

Answer 44

lower/upper limits of 50k/250k apply for AP of 12 months if AP = less than 12 months, limits must be reduced proportionately e.g., 6m period, 50k*6/12 = 25k LL, 250k*6/12 = 125k UL

Question 45

when are two companies 'associated'?

Answer 45

if either: - one of the companies is under the control of the other - if they are both under the control of a third party

Question 46

can UK companies be associated? can O/S companies be associated? can dormant companies be associated?

Answer 46

UK = yes O/S = yes dormant = no

Question 47

implications of being associated with other companies?

Answer 47

- divide upper & lower limit by number of associated companies - dividends received from associated companies are NOT added to TTP to get AP

Question 48

how is sustainability implemented in CT?

Answer 48

tax policies such as: - FYA on zero emission vehicles - 6% on pollutant vehicles, 18% on non-pollutant

Question 49

when must CT return be submitted?

Answer 49

latest of: - 12 months after end of accounting period (if period is shorter than 18 months) - 30 months from the start of the period (if period is longer than 18months) - 3 months from issue of notice to submit a return

Question 50

how are instalments paid for short accounting periods?

Answer 50

first instalment is the lower of: - 3*CT/N (CT=corporation tax for period, N=number of months in period) - total corporation tax for the period subsequent instalments are calculated in same way until liability is paid first instalment due by 14th day of 7th month following start of the AP, subsequent instalments are due every 3 months last instalment is a balancing payment, due by the 14th day of the 4th month after the end of the accounting period

Question 51

interest due on overdue CT runs from...

Answer 51

date on underpaid to the date of payment interest is based on the difference between the ACTUAL payments made and payments that SHOULD have been made