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Recording Corporation tax refund

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Hi, we were due a refund from HMRC in respect of Corporation tax so posted the following journal in anticipation:

DR CL/Corporation tax

R P&L/Corporation tax charge

We have now received the refund plus interest. Do i post the total amount incl ineterest to clear CL/Corporation tax or do i split it? If so, which code shall i use for interest? should this be a BS or P&L account?

Thank you

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By Anonymous.
26th Jun 2020 14:51

NatBee wrote:

If so, which code shall i use for interest? should this be a BS or P&L account?/p>

Definitely P&L unless you believe the interest has been paid in error and will need to be repaid.

Could you provide a list of "code" options so we can advise the most appropriate?

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Replying to Anonymous.:
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By NatBee
26th Jun 2020 14:57

i was thinking to code it to Other income/ Interest received. Thank you

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Replying to NatBee:
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By Anonymous.
26th Jun 2020 15:43

NatBee wrote:

i was thinking to code it to Other income/ Interest received. Thank you

That certainly sounds right.

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Replying to NatBee:
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By Paul Crowley
26th Jun 2020 17:52

Interest received
It is taxable

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Psycho
By Wilson Philips
26th Jun 2020 14:58

Thinking it through might help you - if you post the whole sum to the balance sheet account you're going to be left with a small Cr balance (assuming no other entries) - what would you you do with that balance?

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Replying to Wilson Philips:
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By NatBee
26th Jun 2020 14:59

Thank you, this does help! :)

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RLI
By lionofludesch
26th Jun 2020 15:32

I'm a little bit surprised that you're posting the credit to Corporation Tax charge.

Is there not a Corporation Tax debtor on your balance sheet in your most recent accounts ?

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Replying to lionofludesch:
Psycho
By Wilson Philips
26th Jun 2020 15:47

Is that not the effect of the first journal entry referred to?

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Replying to Wilson Philips:
RLI
By lionofludesch
26th Jun 2020 16:19

Ah right - yes - I think - maybe.

I could well have misunderstood that.

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