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 by
means of completing form CT41G.
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)
-
18 to 24 months late - Extra tax geared penalty of
10% of the unpaid tax.
-
More than 24 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 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 with 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 due 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.
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