Hi all, just wanted to ask a quick question to help stop me panicking as I have a tight deadline client.
I have decided to add corporation tax return and also companies house filiing to my services, I am having everything checked by someone who is qualified, to make sure I am doing things correctly.
I've sorted the companies house filling, but as I understand corporation tax is payable 9 months after financial year end, therefore my clients needs to pay by 8th November.
I am currently dealing with his accounts and CT600 to HMRC, but I have a lot longer to complete that, so that part should be ok, once I have it checked.
Am I correct that if client is making a small amount of profit and then with Capital Allowances added they are making a loss, then there wouldn't be corp tax to pay?
eg
profit +£200
Capital allowance -£1000
= Taxable profit £ -800 x 21% = £168?
Just want to be clear.
Thanks for your help, it is hard learning new things!, I feel really lucky to have mentor to guide me through this.
And of course this forum!.
-- Edited by lor on Thursday 27th of October 2011 12:44:41 PM
Your client must have an unusual year end if the corporation tax is payable on 8 November.
You're right that if your computation is showing a taxable loss due to capital allowances, then there shouldn't be a corporation tax liability for the period. This assumes that the company doesn't have any other forms of income - such as bank interest receivable - that exceed the trading loss. Depending on the trading performance of the client in the past, you may able to generate a refund by carrying back the loss to the prior year.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
Your workings look fine.. but will show you how I remember below.
Normally, for a Limited Company you have a situation something like - as detailed below:
Profit per Accounts (e.g) 1,000
Plus: Depreciation in A/c's 250
Less: Capital Allowances (1,000)
Taxable Profit 250
In terms of if you make a loss, if it is your 1st year I think your only option is to carry this forward and offset against future profits. If it is not the first year any losses can be carried back against previous years profits and your client will receive a Corp. Tax refund.
Your client must have an unusual year end if the corporation tax is payable on 8 November.
You're right that if your computation is showing a taxable loss due to capital allowances, then there shouldn't be a corporation tax liability for the period. This assumes that the company doesn't have any other forms of income - such as bank interest receivable - that exceed the trading loss. Depending on the trading performance of the client in the past, you may able to generate a refund by carrying back the loss to the prior year.
yes, the accounting period runs from 07/02/2010 - 28/02/2011, as date of incorporation was 07/02/2010 and companies house have requested abbreviated accounts up to 28/02/2011, I have filed accounts to ch from 07/02/2010 to 28/02/2011.
Which leads me to my next question, just to make sure I am on the right track, when doing his CT600 and attached accounts, it will only allow period of 12 months. I believe then I need to do 2 separate returns, 1st 08/02/2010 - 07/02/2011, 2nd one from 08/02/11 - 28/02/2011.
Am I correct about the returns (ct 600 and accounts), that they won't be rejected due to the fact that companies house accounts and hmrc accounts, match the same period but hmrc will be broken down between 2 returns. Just want to be sure!.
On different note went for a scuba dive try dive last night, excellent experience.
-- Edited by lor on Friday 28th of October 2011 05:37:11 AM
Yes, assuming that the company came within the charge to corporation tax as soon as it was incorporated, then you'll need to do two CT600 returns as you suggested.
If you're using the HM Revenue & Customs software to file the corporation tax returns, then this link has guidance on what to do if you have a long period of account.
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
Thanks for that, read through and found out that there needs to be 2 x CT600, but only one set accounts and one computation only, to be attached to the 1st ct600. Thank god for that, makes things easier.
now I'm thinking, as it's 2 ct600's what period do I use. Would I have to separate all the figures on the return to show period from 08/02/2010 - 07/02/2011 on the first ct600 then on the second one use from 08/02/2011 - 28/02/2011. This part is confusing me now. Is this what I will have to do??.
confused.com, how I read it is that you just have one set of workings out and figures for the period 08/02/2010 - 28/02/2011 BUT put the accounting period on form as 08/02/2010 - 07/02/2011 and this would be on 1st return, so would you repeat these figure on second but change period to 08/02/2011 - 28/02/2011. I'm getting confused just typing it!
-- Edited by lor on Friday 28th of October 2011 02:42:07 PM
I don't use the HM Revenue & Customs software myself so I don't know the mechanics of how you would enter this on their software.
However, the theory is that your computation would be:
Profit per accounts: (say) £400
Add: disallowables (depreciation etc) (say) £100
Adjusted profit before capital allowances: £500
The computation then splits into two columns as this profit is time apportioned between the first return (365 days, so £500 x 365/386 = £473) and the balancing period (21 days, so £500 x 21/386 = £27). You would then work out the capital allowances for each period separately. In practice, capital allowances will probably just be the AIA on any additions purchased. So, for example, if the only additions were computers for £1,000 during the year ended 7/02/11, the computation would show:
Year ended 7/02/11: £527 loss (i.e. £473 profit - £1,000 capital allowances)
Period ended 28/02/11: £27 profit
The CT600 for the year ended 07/02/11 would show a nil trading profit but disclose the capital allowances and trading losses carried forward.
The CT600 for the period ended 28/02/11 would show the £27 trading profit and presumably the use of £27 of the trading losses brought forward.
-- Edited by Robert Pearce on Friday 28th of October 2011 03:56:07 PM
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Pearce & Co - Chartered Accountant and Chartered Tax Adviser
I'm using VT accounts, the only problem is as I doing a full set of accounts for period 08/02/2010 - 28/02/2011, all the accounts are fine but the Tax computation sheet has errors as it will only accept a one year length period as far as I can tell. Does anyone know what I am doing wrong?.
me being thick, new software worries, panicking it's not working! - I have gone back to the drawing board and realised that the software has worked out correctly, I was getting myself confused over the corporation tax years, i.e. this one covers 2009, 2010, but for some reason I as thinking that it would require to cover 2011. At least I have learned the software more.
If you look at the VT help there is a whole explanation about how to produce the comps for a long period. It's a bit of a pain to be honest but easy to do once you have the hang of it. You will need to use VT to produce the comps so that you can get the iXRBL file.
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Jenny
Responses are my opinion based on the information provided. All information should be thoroughly checked before being relied on.
If you look at the VT help there is a whole explanation about how to produce the comps for a long period. It's a bit of a pain to be honest but easy to do once you have the hang of it. You will need to use VT to produce the comps so that you can get the iXRBL file.
mentor has sent back my work and it is ok, so that part is don phew, have also completed 2 returns and have sent that for checking, have used vt to turn to iXRBL files, pretty easy once you have figure out the vt software.
I did have a few problems over the course of times, mainly software issues (me! not quite grasping it) and also learning which periods incl etc, and having to do each part ie ct600 ch filing and the accounts in vt and tax comps 10 million times (well felt like it) before getting it right! (or to some standard where I felt like I wasn't sending a mess to the mentor. but feel I did well considering my 1st one! - next ones will be easier!
Thank you for this forum again and the people on it!
-- Edited by lor on Monday 31st of October 2011 06:57:25 PM
