Osborne 5 - Calculating the CT Liability

Question 1

Losses:

Trading losses

Answer 1

Carry forward against future TTP b4 QCD

or

Set against current period TTP b4 QCD

THEN set against TTP b4 QCD pmts f previous 12 months

Question 2

Losses:

Capital losses

Answer 2

Capital losses.
MUST First set against chargeable gains arising in same CAP, THEN carry forward against chargeable gains in the future. (Only against chargeable gains)

Question 3

Losses:

Rental losses

Answer 3

Rental losses can (must?) be set against the current period TTP and any amount not used carried forward and set against FIRST AVAILABLE TTP b4 QCD payments

Question 4

Splitting company profits for long periods:

Trading profits (before deduction of CAs) ?

Answer 4

Adjust and then TIME-APPORTION the resulting Adjusted trading profit.

Question 5

Splitting company profits for long periods:

Interest from Non-Trade investments

Answer 5

Interest is CALCULATED ON AN ACCRUALS BASIS and is split based on how much relates t each period (the amount ARISING)

Question 6

Splitting company profits for long periods:

Profits from renting out property

Answer 6

The PROFIT is CALCULATED ON AN ACCRUALS BASIS and is split based on how much relates t each period (the amount ARISING)

Question 7

Splitting company profits for long periods:

Chargeable gains

Answer 7

ALLOCATED to each period based on when disposal takes place

Question 8

Splitting company profits for long periods:

QCDs

Answer 8

QCDs are deducted from the TTP of the relevant CAP based on date of payment

Question 9

Related 51% group companies

installments are based on ‘estimated’ tax payable.
These should be revised each quarter if necessary.

Answer 9

For working out if a company must pay Corp Tax installments.

You need total number of group companies so if there are 3 related then total is 4 including ‘yourself’

Profits over £1.5M for a 12 month CAP (may need to apportion)

UNLESS:

• The current Corp Tax liability is below an annual rate of £10K (ie tiny company)

OR

• Provided current profit are below £10M

IF in the previous 12 months

• it didn’t exist (ie new company)
• or didn’t have a CAP
• or had a CAP that had either:
  
  • Profits below the limit if £1.5M or
  • CT below £10K per year

Question 10

CT600

Page 2 boxes: 160

Box 160 Trading losses brought forward against set against trading profit - what to remember

Answer 10

This box is only for trading losses brought forward from before April2017 to be set against profits from the same trade.

Where losses are set against Taxable Total Profits (TTP) these are recorded in box 285 which is Page 4 of the form

Question 11

Corp Tax

Interest

Answer 11

Payable on tax after Due date including installments

HMRC current rates

1. 10% for underpaid installments
2. 60% on late final payments

Question 12

Corp Tax interest & penalties:

Interest

Answer 12

Payable on tax after Due date including installments

HMRC current rates

1. 10% for underpaid installments
2. 60% on late final payments

Overpayment 0.5% !!!

Interest paid to the company for overpayments is taxable.

Interest payable is an allowable deduction against NON-TRADING INTEREST

Question 13

Corp Tax interest & penalties:

Penalties for not telling HMRC company is liable for CT

Answer 13

Must be done withing 3 months of start of biz activities

usually on a ‘new company details’ form.

Penalty is based on a percentage of 
'Potential Lost Revenue'  (ie. the CT that would be due)
Rage from:
0% reasonable care taken
100% deliberate & concealed

This is same system that applies to errors in tax returns

Question 14

Corp Tax interest & penalties:

CT600 late filing penalties

Answer 14

Time after your deadline Penalty

1 day £100
3 months Another £100

6 months HMRC estimate CT and add a penalty of 10% the unpaid tax

12 months Another 10% of any unpaid tax

Question 15

HMRC enquiry deadline

Answer 15

within 12 months of SUBMISSION

Failure to supply docs £300 +£60 per day

Company may amend within 12 months of submission but change in tax due doesn’t take effect until after any enquiry is complete.
Bit confused as elsewhere read if ‘company finds error in previous year’s TR and wants to ‘adjust’ the return (perhaps to claim a repayment) the time limit is 4 years from the End of the tax year’ … ahh found on HMRC see ‘overpayment relief’ bit below

30 days for appeal after closure notice.
Can be PCN (partial closure notice.

Overpayment Relief:
You can claim a refund up to 4 years after the end of the tax year it relates to. If you’re making a claim, also include in your letter:

that you’re making a claim for ‘overpayment relief’

Question 16

Types of records.

6 years after end of accounting period.
Extended if an enquiry is taking place

Answer 16

For:
auditors
HMRC
DWP

Ledger accounts
Fin docs (invoices Cns Bank statements)
Payroll records
VAT records

Specific to CT
SPL / SFP
Tax working papers including CA computations
Copies of Tax returns
Invoices for expenses & NCAs
NCA schedules
Dtails of non-trade income