I hope someone with knowledge can help me with two confusing deadlines as even HMRC staff couldn’t answer my question. Many thanks in advance!
The deadline for paying corporation tax is 9 months and 1 day after accounting period ends but the deadline for filing a company tax return is 12 months after accounting period ends. Surely without filing a tax return you wouldn’t know how much corporation tax to pay in the first place, so what is the point for having a longer deadline for filing tax return? Wouldn’t it make more sense that the two deadlines are the other way around or at least to be equal. Am I missing something here?
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You can of course calculate the tax before lodging.
I compute our CT in excel when I prepare the accounts, I then later use tax software to compute liability before lodging, I can then check the two marry up- in effect the manual calc is a check on my use of the software as if they do not agree I check the difference.
Remember you also have the accounts filing deadline for Companies House and to prepare the accounts for these you need to have provided the tax within same.
So my order is do accounts workings , prepare tax comp, journal tax figures into ETB, prepare stat accounts from ETB, import final stat accounts into tax software (taxcalc) and adjust these in same, produce CT600, check that figure to the earlier tax comp prepared as a final check pre submission.
Am I missing something here?
Yes. An accounting qualification.
In response to your unasked question: yes, you do need to engage an accountant.
Rude. Rude. Rude.
You've reopened a year old thread just to post that ???
You're a bit late to the party.
“ Surely without filing a tax return you wouldn’t know how much corporation tax to pay in the first place”
Wrong way round. You can’t file the return until you know what the liability is. As to why the time limits are different, I don’t know and don’t care - personally, I don’t find it confusing at all.
yes, you can calculate your corporation tax liability using excel or accounting software but my point is that the final official figure will only be available after filing the company tax return with HMRC, so surely it would make sense to file the tax return first before paying your corporation tax.
Wrong. It’s the company’s responsibility to self-assess its tax liability, which is then reported to HMRC on the return. What appears on HMRC’s record is not ‘official’ confirmation of the tax liability, merely a reflection of what the company has submitted.
There is of course nothing to prevent you from filing the return first and paying later if you feel so inclined.
Considering Corp tax is a percentage of net profit it doesn't take a maths genius to work out the tax bill before filing a return. Forgetting the fact for a second it's not the return that actually calculates the tax figure but your actual accounts which you would have already completed regardless of when you file your tax return. Unless you love to leave things to the 11th hour then I can see how confusing it might be for you.
It seems a perfectly fair question to me. It has always struck me as odd given the filing deadline for the accounts is 9 months and the CT payment deadline is 9 months, why would the return deadline be 12 months?
Apart from "that's what the legislation says", any ideas as to how it evolved that way?
For a short period before it was called CTSA it was called 'Pay & File'.Apart from "that's what the legislation says", any ideas as to how it evolved that way?
It seems a perfectly fair question to me. It has always struck me as odd given the filing deadline for the accounts is 9 months and the CT payment deadline is 9 months, why would the return deadline be 12 months?
You can calculate the Corporation Tax well before the due date and, indeed, you need to do that in order to file the accounts.
However, how can you calculate the s455 charge before the nine months is up ?
Good point so that gives 3 months to compute and file. But, IIRC, the S455 charge is also payable 9 months + 1 day after the end of the period so there still seems to be a mismatch.
Well, Companies House want your accounts after nine months, which is plenty. I don't see why that should be extended.
HMRC want their money after 9 months and a day, I don't see why they should wait longer. I can't remember it being anything else.
Then they give you three months to fill in your return and justify your payment. No problem.
The obvious alternative is to cut the s455 time down from nine months to six. Or none. Then we all suffer just to suit disorganised folk who can't cope with two deadlines.
It may be the rule but I've never known HMRC penalise anyone for not complying with the 9 month & 1 day rule
It may be the rule but I've never known HMRC penalise anyone for not complying with the 9 month & 1 day rule
Really? You’ve never had a client be charged fines & interest for late payment of their CT?
It may be the rule but I've never known HMRC penalise anyone for not complying with the 9 month & 1 day rule
That's the day interest starts to run. Penalties are for late returns.
Bit like Income Tax Self Assessment.
Why "strangely"? At present, there are no fines for late payment of CT, except for payment by instalments and even then only in certian circumstances. Having said that, late payment penalties are on the horizon.
In a previous larger corporate job, our stat accounts were done by KPMG, (typically around 9 months), including a provision.
After filing etc, the tax work was done for us by Deloitte, within the further 3 month timeframe.
Does this thread https://www.accountingweb.co.uk/any-answers/sofware-with-capital-allowan... provide the answer?
Don't tell Katie that large companies pay half their corporation tax during the year in question. It'll blow her mind!
I think, to some extent, no-one knows!
Pre 1993 (indeed since CT was introduced, I believe) CT was due on the later of;
9 months after the end of the period assessed, or;
30 days after the date of the assessment.
The 9 months was to coincide with the date by which accounts were filed at CH.
No-one ever really bothered with CT returns. HMRC was only concerned to get the accounts and computations so that appeals etc could be finalised ( and that often took years!).
Then came CTPF (CT Pray and Fail as we came to know it).
This was the testing ground for the whole of SA.and introduced the idea of working out the tax due, paying it by the due date and filing a return. It was a bit of a half-way house between the old system and full SA.
Generally, the same due date for payment was kept (pre 1993, 9 months and 1 day was allowed by concession) and the filing date was fixed in line with what they intended for a SA system, that is to say allowing a slightly longer time than for payment.
I think they did not impose penalties for late payment because they were relying on companies to pave the way for the wider SA for everyone (and they never had them pre-1993).
When SA for individuals etc was introduced in 1997 they felt differently about it! However, there was no rush to change to CTSA because, generally speaking CTPF worked. When they finally brought in CTSA, very little actually changed and I suspect it was not felt worthwhile pushing for a late payment penalty system ( not least because the existing computer system would have been unable to cope).
The one other area was S455 (as is).
Previously, the tax was due when assessed. I think the strict due date was 14 days after the end of the AP in which the loan was made and repayment was due when the loan was repaid. The main thing affected was interest and due dates broadly followed this except that, at the time, HMRC paid an interest supplement on repayments (same as repayment interest) but that was only due after about 12 months.
When they brought in CTSA they wanted to get S455 dealt with in the return etc so they changed things round and the current rules were introduced. The most significant change was the due date for payment of the tax and the effective date for repayment. Both were set to fall in with the SA timing. So, tax due 9 months and 1 day after end of AP in which loan made and relief for repayment due only 9 months and 1 day after the end of the AP in which repayment made. The obvious exception made was for loans repaid within 9 months of the end of the AP in which advanced, where no tax is payable.
One can probably be forgiven for thinking it is all a bit confusing but if you lived through it, it all seems fairly obvious!
Back to sleep now!
No it wasn't, back then it was 10 months for a private company to file at CH.The 9 months was to coincide with the date by which accounts were filed at CH.
And we should all remember the timing joys of ACT payments and the quarterly CT61s these required. What is now strange is I can still vaguely remember 1980s processes re tax but keep forgetting the names of my nieces' and nephews' children.
Absolutely, on all points!
Unfortunately still have to do one or two CT61s for interest payments. About time they were paid gross.
My late father's complaint.
I have three sisters and he would muddle their names up all the time, so something he would tell me about one would turn out to be about another. He had no such excuse in my case, my being his only son, so made up for that by addressing me using the name of one of my cousins instead.
