CT600 and provision for liabilities

CT600 and provision for liabilities

Didn't find your answer?

If a company has set a side funds in its accounts for run off indemnity insurance (under the category of ‘provision for liabilities’), how is this represented in the CT600 so that corporation tax is not due for that amount? 

 

The company is closing but will need to pay indemnity insurance annually for several years.

 

Thank you for any help.

Replies (8)

Please login or register to join the discussion.

By Duggimon
03rd Sep 2018 10:18

I don't understand, either the company is closing or it isn't. If it's closing then it can't be paying anything for several years because it won't exist.

Thanks (0)
avatar
By Jobab
03rd Sep 2018 10:22

It will cease trading.

Thanks (0)
By johngroganjga
03rd Sep 2018 10:29

Quote:
how is this represented in the CT600 so that corporation tax is not due for that amount?

You don't add it back. Job done.

Thanks (0)
avatar
By andy.partridge
03rd Sep 2018 10:31

I should imagine this is requirement stipulated by the chartered body or similar of its members. I believe RICS requires this of its members, or used to.

It can't be a future liability of the a company that doesn't exist. I should imagine it is the personal liability of the director. The money shouldn't be 'set aside' on closure or it will become the property of the Crown.

Thanks (0)
avatar
By Jobab
03rd Sep 2018 11:13

Thank you for the replies. I mistakenly put closing when I mean the company will stop trading but remain open.

Ok so you don’t add it back but is it recorded as a business expense and if so under what category in the CT600? If it’s not on the CT600 at all then the turnover and expenses will not tally I would have thought?

Thanks

Thanks (0)
Replying to Jobab:
By johngroganjga
03rd Sep 2018 11:34

It’s wherever you put the debit when you credited provisions.

You are mixing up the accounts and the tax return. Yes of course the accounts have to balance. But the only figure from the accounts that appears on the tax return is the profit or loss before tax.

Thanks (0)
Replying to johngroganjga:
avatar
By andy.partridge
03rd Sep 2018 11:50

. . . and turnover.

Thanks (0)
Replying to andy.partridge:
By johngroganjga
03rd Sep 2018 12:06

Quote:

. . . and turnover.

Agreed

Thanks (0)