Corporation Tax - Entries in Accounting Books

Corporation Tax - Entries in Accounting Books

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Hi,

I have prepared my ltd company's accounts for the year ended 31st December 2006 and I would greatly appreciate your help.

I have calculated and paid my corporation tax for the accounting period ended 31/12/2006. The payment was made in September 2007.

How should this payment be treated in the accounting books? Which account should be debited and which should be credited?

I understand that this is better dealt with a professional accountant, however the company's profit is so small that does not cover the use of an accountant.

I would greatly appreciate if you could kindly explain me the entries that I have to do in my accounting books.

Many thanks in advance.
Alex Jones

Alex Jones

Replies (4)

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By skylarking
30th Sep 2007 15:59

You might want to . . . .
Look at the answers to the question when you posted it last time. They are still valid even though they must be all of a few weeks old now.

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By User deleted
30th Sep 2007 21:26

Alex
If money comes back, then it's:

Dr bank account with total refund
Cr Interest receivable
Cr Corporation tax (P&L, previous year)

Just out of interest, if you have calculated your tax and made your payment, why would you pay more tax?

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By User deleted
30th Sep 2007 14:16

.
Entries dated 31.12.06 are:

Dr Corporation tax (profit and loss) with the calculated tax
Cr Corporation tax (balance sheet) with the same amount

Entries dated September 2007 are:

Dr Corporation tax (balance sheet) with the tax paid - thereby clearing the account
Cr Bank account with the same amount

It's good that you are trying to cut costs but I would strongly advise you to retain an accountant once your business starts to grow. There are real benefits in doing so and the cost need not be prohibitive. Shop around and pay monthly on a fixed fee basis and you won't go far wrong.

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By User deleted
30th Sep 2007 19:58

Steve
Give the lad a break, he's trying to do it himself.

I think from the other numerous posts and responses that he's done, he's been advised to get professional help. I think he's got the message. We can't do any more than that.

And yes, we've all seen the results of when taxpayers try to sort out their affairs before.

But we also know the pressures on new businesses, getting the working capital, reaching break even, paying yourself a dividend (or is that salary??).

- But as long as everyone's aware of the risks - well, you know the rest.

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