Payment of 1st year Corporation Tax Returns

1st Year Tax Returns

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I am preparing the corporation tax returns for my client for their first year... obviously as it is their first year they have to file two (one for the first 12 months and another for the remainder of the period). Having now done the tax calculations for the two returns it looks like the first will result in a taxable profit, but the second will show a trading loss - not due to any year-end adjustments, just significant expenses in a short period.

My question is how this should be paid? Although they are separate returns, since they are being submitted at the same time, can they be combined and paid together? The statutory accounts that accompany them will show the combined number anyway. Or would it be necessary to carry back the loss?

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RLI
By lionofludesch
08th Oct 2016 09:36

So you're preparing two sets of formal accounts which you'll submit to Companies House ?

Have you changed the ARD to allow you to do that ?

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Replying to lionofludesch:
By johngroganjga
08th Oct 2016 09:39

lionofludesch wrote:

So you're preparing two sets of formal accounts which you'll submit to Companies House ?

Have you changed the ARD to allow you to do that ?

That's not what I read in the question. The question is about two CT periods within one long period of account. So one set of accounts but two tax returns.

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By johngroganjga
08th Oct 2016 09:37

The normal way of splitting the result for a long period of account is by time apportionment. Is there any good reason for not doing it that way?

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Replying to johngroganjga:
RLI
By lionofludesch
08th Oct 2016 09:48

Ah - I see.

Well, time apportionment will indeed solve all Mrsnewb's problems.

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Replying to lionofludesch:
The triggle is a distant cousin of the squonk (pictured)
By Triggle
08th Oct 2016 09:53

...depending on the capital allowances claims for each of the periods of account.

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Replying to johngroganjga:
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By MrsNewb
08th Oct 2016 09:52

Yes, my question is about CT not the accounts.

If time apportionment is the standard way of doing it then that is fine. My assumption was to account for everything in the first period, calculate the tax due and then do the same for the second period.

If I apportion it, would it be reasonable to take the long period which is 56 weeks and split it into 52 weeks and the other 4 weeks?

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By Wanderer
08th Oct 2016 10:11

MrsNewb wrote:
Having now done the tax calculations for the two returns it looks like the first will result in a taxable profit, but the second will show a trading loss - not due to any year-end adjustments, just significant expenses in a short period.


Are you sure you are doing this correctly?

Shouldn't you take the one (accounts) period of account & time apportion it into the two (tax) accounting periods?

Edit: other answers weren't showing when I posted the above. Yes 52/56 & 4/56 will be fine. Or do it on the number of days

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Replying to Wanderer:
RLI
By lionofludesch
08th Oct 2016 10:53

Days has been the accepted method since calculators became common place.

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By Marion Hayes
08th Oct 2016 10:18

Did they really start trading on day 1?
Usually there would be a dormant period first for which no return is due anyway

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Replying to Marion Hayes:
By Duggimon
10th Oct 2016 11:43

If they were registered for CT from the incorporation date then a return for the dormant period is very much due, unless HMRC have been contacted and have agreed to withdraw it.

Just last week I appealed against a fine for late filing of the return covering exactly that dormant period so I'm fairly sure all else being equal HMRC still expect these to be filed.

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Stepurhan
By stepurhan
10th Oct 2016 12:00

If a company is dormant for a period, then it is incorrect to submit a CT return for that period. It is preferable to notify HMRC in advance to correct this, but I have submitted returns with accounts showing the start of trading date, and those have corrected the accounting periods.

Also, if two returns are due for the same accounting period, then the deadline for both is the normal one (i.e. 12 months after the accounting year end, not 12 months after each individual return).

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