Accounting Treatment of CT Penalties and interest

Accounting Treatment of CT Penalties and interest

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Hello

I wonder if anyone can advise me on a couple of queries regarding CT Penalties and their treatment.

I have a new client, as the previous accuontant never go anything in on time.

The client paid £1,318.37 in February this year, as £1,000 penalty and £318.37 interest charged.

A:Do I apply the interest charge to the P&L and leave this in the NP figure or add back for taxation purposes.

B: Do I apply the penalties as an expense to the P&L but add back before working out CT for this year

OR

C: Do I apply the penalites to the Director Loan Accounts, as it is not an allowable expense for the P&L

    and is the interest treated this way also?

Many Thanks to all those out there with the experience and knowledge.

Carolynne

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By JKnight
05th Dec 2011 19:36

Hi

 

The interest is an expense and allowable for corporation tax purposes.

The penalty is also an expense but it is disallowable.

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