Editorial team
AccountingWEB.co.uk
Share this content
0
4
1496

CT600 query

Our company was incorporated in December 1999 and will draw up its first accounts to 31.12.2000. My questions are:

(i) Given that we commenced trading in June 2000 do all our profits fall in to the period 1.4.00 onwards?

(ii) As we have profits of say £13500 what is our liability to CT? I understand that there are 10% and 20% rates but I cannot get my head round this marginal rate calculation?

I know this is really a question for our accountants but our particular one seems to charge us £100 every time we seem to pick the phone. Yes we are looking to change!

Many thanks in advance
Sam
Samantha Jennings

Replies

Please login or register to join the discussion.

Corporation tax liability
I understand that the corporation tax calculation is based on the trading period of the company, from Jun 1999 to Dec 2000, but the CT returns would have been issued for the accounting periods from Dec 1999 to Nov 2000 (12 months) and for Dec 2000 (1 month). Therefore, how do we sort out this problem?

Thanks (0)

CT600 June 2000 to December 2000
More information is really needed but, in general CT600's are required for trading periods (in your case June 2000 to December 2000) and not accounting periods (in your case December 1999 to December 2000). So your CT600 should probabally be filed for June to December. Based on such a period and profits of £13,500 the company will pay tax effectively on part of your profits at 10% and partly at 22.5%.

do however check with your own accountant as relevant other factors might be missing from your query.

Thanks (0)

Marginal rate relief
You need to be careful, if your year end straddles over two tax years. You need to pro rata the marginal rate relief.

For instance, your year-end is 31/12/00, therefore 275 days fall after 31st March 2000, thus the Marginal relief for profits need to be adjusted.

The new rates will be:

7513 - 37568

You then need to calculate the profit after 31/03/00, which will be (13500 x 275/366 = 10143)

The calculation is then as follows:

37568 - 10143 x 1/40
= 685.63 this is the Marginal rate relief.

The Corporation Tax you will pay will be:

profits to 31/03/00 3357 20% 671.40
profits after 01/04/00 10143 20% 2028.60

Less Marinal relief 685.63

Corporation Tax 2014.37

Should the adjusted profit after 01/04/00 be less than 7513, then the MCT rate would have been 10%. On the other hand, if it had been greater than 37568, then no relief would have been given and the full rate of 20% would be shown.

I hope this helps.

Thanks (0)