Corporation Tax Self-Assessment

Registration

To ensure avoidance of penalties, companies should notify HM Revenue & Customs within 3 months of commencing trading which is normally done at the same time as registering with Companies House.

Filing Dates of Returns

The corporation tax self-assessment return (CTSA) must be submitted to HMRC along with the accounts and tax computations, although it is possible to file all this information online through the HMRC website. The filing deadline for the CTSA return (plus accounts and tax computations) is normally 12 months from the end of the accounting period. If the return is late there are penalties as follows…

• Up to 3 months late – £100 (increasing to £500 for a third consecutive late return)

• Over 3 months late – £200 (increased to £1000 for a third consecutive late return)

• 6 to 12 months late – Extra tax geared penalty of 10% of the unpaid tax.

• More than 12 months late – 20% of the unpaid tax.

Payment Dates For Corporation Tax

This is usually 9 months and 1 day after the end of the accounting period for small companies. However large companies (£1.5 million of profits) pay under 4 quarterly instalments, that commence 6 months into the accounting period, so they must use an estimate of their eventual tax liability for the year. Companies that form a group may fall into the definition of “large” and be required to pay corporation tax by instalments. Interest runs on late payment.

CT61 Returns

Companies must also deduct income tax from some payments (such as some interest payments) and pay this over to HMRC within 14 days of a quarter end. Quarters end on 31 March, 30 June, 30 September and 31 December, with an extra return in the period up to the accounting period end if it does not coincide with these dates.

Time limits for correcting and enquiring into tax returns?

HMRC generally have 9 months after a return is filed (or an amendment filed) to correct obvious errors such as arithmetic mistakes. The company can amend the return within 12 months of the filing date.

With regards to enquires, returns can be selected at random or for a reason (but HMRC don’t have to say which) at any time within 12 months of the date the return is filed (assuming the return was filed early) filing date or if the return was filed late it is from 12 months of when it is filed plus the period to the next quarter day (31 Jan, 30 April, 31 July, 31 October). Where there is an amendment, the time limit changes to 12 months from the date of the amendment plus the period to the next quarter day.

However, HMRC can make a discovery assessment if there is a loss of tax due to fraud or negligence, or if the facts giving rise to the loss of tax only became known to HMRC after the time limit for opening an enquiry had expired and they could not reasonably have been expected to be aware of the facts from the information made available to them at the time. The normal time limit for discovery assessments is 6 years after the end of the accounting period but is increased to 20 years in cases of fraud or neglect.

Records

Records must normally be kept in support of the return for 6 years from the end of the accounting period. The penalty for non-compliance can be as much as £3000 for each accounting period.

How we can help you

We can assist you with all aspects of corporation tax compliance and planning.