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Ltd company incorporated in 18/07/2010

The company began trading properly in July 2011 -  there were initial set up costs and marketinhg but no actual invoices until July 2011.  The accounting period was changed from July to Dec so the accounts will be prepared from incorporation to 31/12/2011.

With regard to CT, HMRC have sent a letter requesting a CT600 for:

18/07/2010 - 17/07/2011

18/07/2011  - 31/12/2011

Is this correct?  HMRC had been notifed that the company was dormant from incorporation but became active from 01/01/2011.

I had expected to do CT for the period from when the company became 'active' i.e July 2011 - Dec 2011.

Any ideas?

Thanks

Thomas

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CT accounting periods

CT returns are required for CT accounting periods.  There is no CTAP until the company starts trading.  The start of "trading" does not necessarily mean the issue of the first sales invoice - it is no later than the date when the company first undertakes work that will result in a sales invoice and may well be earlier, such as when the company starts holding itself out for business.  You appear to have specified 01.01.2011 as the start of trading.

If so, there is no CTAP and no CT return is required for the period from incorporation on 18.07.2010 up to 31.12.2010.  Your first (and only) CTAP will be the 12 months from 01.01.2011 to 31.12.2011.  The filing deadline is 31.12.2012.

Whatever HMRC may think (and they have assumed that the company started trading immediately on incorporation, so they do not appear to have picked up your notification of 01.01.2011), the CT600 which you submit for the y/e 31.12.2011 will displace their expected dates.

Thanks (1)

Accounting Periods

There seems to some confusion when you started trading. Was it 1/1/11 or 18/7/11? Once you have settled that and informed HMRC the notices to submit a CT600 should be (1) start of trading plus 12 months (2) balance of period to 31/12/11. HMRC will then issue a key dates letter showing tax and filing deadlines which you should check carefully. You can also check online if you have access.

There is an earlier filing deadline you need to be aware of. Companies house will expect their first accounts 21 months from incorporation. So if you incorporated on 18/7/2010 and prepare accounts to 31/12/2011, the first accounts filing deadline will be 18/04/2012 - a lot earlier that the HMRC deadlines. In subsequent years it will be 9 months from the accounting period end.

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Depends when you moved the year end

You always get at least 3 months to file accounts after extending the year end (provided the accounts were not already overdue when you made the extension), so if say you extended it on 17/4/11, the filing deadline would have been 17/7/11.

As that date has now passed and you've no doubt filed the accounts already, that is probably a bit academic. But it's well worth noting for future reference that if you get the timing exactly right you can wangle yourself an extra 3 months to file the accounts. Something we've used to good effect before when taking on new clients right on top of the filing deadline.

With regard to the corporation tax return, if the company incurred expenses prior to the official date when it started trading, it would probably be best to do the CT600 from that date so they count as allowable expenses.

As someone has pointed out, trading begins once a company has begun economic activity, which normally includes the incurring of expenses, so the trading date might be earlier than you think.

I believe pre-trading expenditure is allowed anyway, but it could help with capital allowances if you need to pro-rata the accounting period, or for the small profits rate if the £300k threshold needs to be scaled back.

Chris

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