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)
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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.
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.
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.
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.