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Lecture 7- Corporation tax

Deleted user 24 questions Updated 12 Jul 2021

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1Corporation tax- Tax levied on [blank_start]profits[blank_end] of [blank_start]companies[blank_end] & [blank_start]unincorporated[blank_end] associations such as clubs & political associations but not [blank_start]partnerships[blank_end]. It is paid by all [blank_start]corporate[blank_end] bodies & there are no special rules for opening & closing years (always taxed on [blank_start]actual[blank_end] basis)
1. Aprofits
2. Bcompanies
3. Cunincorporated
4. Dpartnerships
5. Ecorporate
6. Factual
2Accounting period- Period for which [blank_start]corporation tax[blank_end] is charged. It starts firstly when company starts to [blank_start]trade[blank_end] & can also start immediately after [blank_start]cessation[blank_end] of last accounting period. Accounting period ceases at latest [blank_start]12[blank_end] months from beginning of accounting period & also cease at end of [blank_start]period of accounts[blank_end]. In addition, it can cease at [blank_start]commencement[blank_end] of winding up, ceases to be [blank_start]UK resident[blank_end] & ceases to be [blank_start]liable[blank_end] to corporation tax
1. Acorporation tax
2. Btrade
3. Ccessation
4. D12
5. Eperiod of accounts
6. Fcommencement
7. GUK resident
8. Hliable
3Period of account- Period for which company makes up [blank_start]its accounts[blank_end]
1. Aits accounts
4If there is period of account greater than [blank_start]12[blank_end] months, accounting period needs to be split into [blank_start]first 12[blank_end] months & [blank_start]balance[blank_end] of [blank_start]time[blank_end]
1. A12
2. Bfirst 12
3. Cbalance
4. Dtime
5Profit allocation to accounting periods (for long periods of account) are trading profits ([blank_start]time apportioned[blank_end]), capital allowances ([blank_start]separate calculation[blank_end] for [blank_start]each[blank_end] accounting period), property & miscellaneous income ([blank_start]time apportioned[blank_end]), net credit on non-trading loan relationships ([blank_start]accruals basis[blank_end]), other income or chargeable gains (when [blank_start]incurred[blank_end]), qualifying charitable donations (when [blank_start]paid[blank_end]) & dividends (when [blank_start]received[blank_end])
1. Atime apportioned
2. Bseparate calculation
3. Ceach
4. Dtime apportioned
5. Eaccruals basis
6. Fincurred
7. Gpaid
8. Hreceived
6Income from non-trading loan relationships- Net [blank_start]interest[blank_end] received by company but also includes all other [blank_start]credits[blank_end] & [blank_start]debits[blank_end] in respect of non-trading loan relationships. It is taxed on [blank_start]accruals[blank_end] basis & consists of all bank & building society [blank_start]interest[blank_end] & [blank_start]interest[blank_end] received from other companies. It is net credit so total [blank_start]credits[blank_end] less [blank_start]debits[blank_end]
1. Ainterest
2. Bcredits
3. Cdebits
4. Daccruals
5. Einterest
6. Finterest
7. Gcredits
8. Hdebits
7For non-trading items if [blank_start]credits[blank_end] > [blank_start]debits[blank_end] it is income from [blank_start]non-trading[blank_end] loan relationships. This is part of [blank_start]total taxable[blank_end] profits. If [blank_start]debits[blank_end] > [blank_start]credits[blank_end], deduct from income to arrive at chargeable profits ([blank_start]total taxable[blank_end] profits). It is usually calculated on [blank_start]accruals[blank_end] basis
1. Acredits
2. Bdebits
3. Cnon-trading
4. Dtotal taxable
5. Edebits
6. Fcredits
7. Gtotal taxable
8. Haccruals
8Property income (i.e. rental income) follows [blank_start]same[blank_end] basis as that for an individual. Capital allowances are [blank_start]allowed[blank_end], but interest on loans is not [blank_start]deducted[blank_end] to arrive at property income. It is [blank_start]debit[blank_end] that is treated with other [blank_start]interest[blank_end]. Losses can be set off against other [blank_start]income[blank_end] of same accounting period & [blank_start]excess[blank_end] carried forward to set against total profits of future accounting periods
1. Asame
2. Ballowed
3. Cdeducted
4. Ddebit
5. Einterest
6. Fincome
7. Gexcess
9Dividends received by UK [blank_start]company[blank_end] from another UK [blank_start]company[blank_end] are not [blank_start]taxable[blank_end] but they may affect [blank_start]date of payment[blank_end] of corporation tax
1. Acompany
2. Bcompany
3. Ctaxable
4. Ddate of payment
10Qualifying charitable donations is treated as normal [blank_start]trading[blank_end] expense. This would include [blank_start]small[blank_end] donations to local charities. In calculating adjusted trading profits you need to [blank_start]add[blank_end] back what has been [blank_start]charged[blank_end] in accounts (which would have been calculated on [blank_start]accruals[blank_end] basis), but amount that is deducted to arrive at total taxable profit is on [blank_start]paid[blank_end] basis
1. Atrading
2. Bsmall
3. Cadd
4. Dcharged
5. Eaccruals
6. Fpaid

11Chargeable gains have to be included in [blank_start]total taxable[blank_end] profit for company. Company's chargeable gains are liable to [blank_start]corporation[blank_end] tax. They are computed in similar way to those of individuals, but there are few differences. One is that companies can claim [blank_start]indexation allowance[blank_end]. Amount to be included in [blank_start]total taxable[blank_end] profit is total of all separate [blank_start]gains[blank_end] during chargeable accounting period, less all [blank_start]losses[blank_end] (net loss would be carried forward & set against future net gains)
1. Atotal taxable
2. Bcorporation
3. Cindexation allowance
4. Dtotal taxable
5. Egains
6. Flosses
12Exemptions that apply to companies include motor [blank_start]cars[blank_end], [blank_start]tangible[blank_end] non-current assets ([blank_start]chattels[blank_end]) sold for less than [blank_start]£6,000[blank_end], “[blank_start]wasting chattels[blank_end]” (unless capital allowances claimed on them), [blank_start]gilt-edged[blank_end] securities & qualifying [blank_start]corporate bonds[blank_end]
1. Acars
2. Btangible
3. Cchattels
4. D£6,000
5. Ewasting chattels
6. Fgilt-edged
7. Gcorporate bonds
13Exemptions that do not apply to companies include [blank_start]principal private residence[blank_end] & [blank_start]annual exemption[blank_end]
1. Aprincipal private residence
2. Bannual exemption
14Aim of indexation allowance was to [blank_start]exclude[blank_end] part of gain due to [blank_start]inflation[blank_end]. This was frozen from [blank_start]31/12/17[blank_end], so still partly applies to companies. [blank_start]Indexation[blank_end] relief will apply now from date of purchase/incurred up to [blank_start]31/12/17[blank_end]. It has to be calculated [blank_start]separately[blank_end] for each item of expenditure. It is calculated by applying change in [blank_start]retail price[blank_end] index
1. Aexclude
2. Binflation
3. C31/12/17
4. DIndexation
5. E31/12/17
6. Fseparately
7. Gretail price
15Indexation factor is calculated as: (RPI [blank_start]month of disposal[blank_end] less RPI [blank_start]month of expenditure[blank_end]) divided by RPI [blank_start]month of expenditure[blank_end]
1. Amonth of disposal
2. Bmonth of expenditure
3. Cmonth of expenditure
16Restrictions to indexation are that it is frozen from [blank_start]31/12/2017[blank_end], if retail price index goes [blank_start]down[blank_end] (between purchase & sale) there is no [blank_start]allowance[blank_end]/no [blank_start]charge[blank_end], there is no indexation allowance on [blank_start]incidental costs[blank_end] of [blank_start]disposal[blank_end] & finally, indexation allowance cannot convert [blank_start]gain[blank_end] into [blank_start]loss[blank_end], or increase [blank_start]loss[blank_end]
1. A31/12/2017
2. Bdown
3. Callowance
4. Dcharge
5. Eincidental costs
6. Fdisposal
7. Ggain
8. Hloss
9. Iloss
17Corporation tax is chargeable according to [blank_start]financial years[blank_end]. [blank_start]Financial year 2020[blank_end] is from 1st April 2020 to 31st March 2021. Corporation tax rates are usually set for financial year by [blank_start]Budget[blank_end] in advance. Then, if necessary allocate [blank_start]total taxable[blank_end] profit to appropriate [blank_start]financial year[blank_end] & will be taxed at [blank_start]rates[blank_end] that apply for those years. Profits are allocated on [blank_start]time[blank_end] basis
1. Afinancial years
2. BFinancial year 2020
3. CBudget
4. Dtotal taxable
5. Efinancial year
6. Frates
7. Gtime
18Corporation tax must be paid [blank_start]electronically[blank_end] since 1/4/11. Date of payment of corporation tax for small & medium sized companies is [blank_start]9 months & 1 day[blank_end] after end of accounting period. Large companies pay by [blank_start]instalments[blank_end]
1. Aelectronically
2. B9 months & 1 day
3. Cinstalments
19Large company (for this purpose) is one with augmented profits of over [blank_start]£1.5m[blank_end]. Very large company (for this purpose) is one with augmented profits of over [blank_start]£20m[blank_end]. Augmented profits are [blank_start]total taxable[blank_end] profits plus any [blank_start]dividends[blank_end] received. However, dividends from companies which are [blank_start]51%+ subsidiaries[blank_end] are ignored. In working out applicable augmented profits, profits are [blank_start]divided[blank_end] by number of companies in group. If accounting period is [blank_start]less[blank_end] than 12 months, limit is [blank_start]adjusted[blank_end] accordingly. Basis of instalments is based on company's own [blank_start]estimate[blank_end] of current year profits. Interest would be charged if there are any [blank_start]underpayments[blank_end] & paid if there are any [blank_start]overpayments[blank_end]
1. A£1.5m
2. B£20m
3. Ctotal taxable
4. Ddividends
5. E51%+ subsidiaries
6. Fdivided
7. Gless
8. Hadjusted
9. Iestimate
10. Junderpayments
11. Koverpayments
20Payment dates for large company is in instalments which are paid on [blank_start]14th[blank_end] day of [blank_start]7th[blank_end] month of year, [blank_start]14th[blank_end] day of [blank_start]10th[blank_end] month of year, [blank_start]14th[blank_end] day of [blank_start]1st[blank_end] month of next year & finally, on [blank_start]14th[blank_end] day of [blank_start]4th[blank_end] month of year. They are paid on [blank_start]quarterly[blank_end] intervals
1. A14th
2. B7th
3. C14th
4. D10th
5. E14th
6. F1st
7. G14th
8. H4th
9. Iquarterly
21Payment dates for very large company is in instalments which are paid on [blank_start]14th[blank_end] day of [blank_start]3rd[blank_end] month of year, [blank_start]14th[blank_end] day of [blank_start]6th[blank_end] month of year, [blank_start]14th[blank_end] day of [blank_start]9th[blank_end] month of year & finally, on [blank_start]14th[blank_end] day of [blank_start]12th[blank_end] month of year. They are paid on [blank_start]quarterly[blank_end] intervals
1. A14th
2. B3rd
3. C14th
4. D6th
5. E14th
6. F9th
7. G14th
8. H12th
9. Iquarterly
22Companies have to do [blank_start]self-assessment[blank_end]. HMRC issues notice ([blank_start]CT603[blank_end]) to company to do corporation tax return. Corporation tax return ([blank_start]CT600[blank_end]) has to be submitted to [blank_start]HMRC[blank_end] due later of [blank_start]12[blank_end] months after end of [blank_start]chargeable[blank_end] accounting period, [blank_start]12[blank_end] months end of [blank_start]period of account[blank_end] in which accounting period falls or [blank_start]3[blank_end] months after Inspector issues notice. It must be completed [blank_start]online[blank_end]
1. Aself-assessment
2. BCT603
3. CCT600
4. DHMRC
5. E12
6. Fchargeable
7. G12
8. Hperiod of account
9. I3
10. Jonline
23Interest on unpaid corporation tax runs from [blank_start]due date[blank_end] to [blank_start]date paid[blank_end]. Interest on overpaid corporation tax runs from [blank_start]due date[blank_end]/[blank_start]date paid[blank_end] to [blank_start]date repaid[blank_end]. Amounts paid/received on under/over paid corporation tax are treated as part of [blank_start]non-trading loan[blank_end] relationship so it will be net debit/net credit for [blank_start]non-trading loan relationship[blank_end]
1. Adue date
2. Bdate paid
3. Cdue date
4. Ddate paid
5. Edate repaid
6. Fnon-trading loan
7. Gnon-trading loan relationship
24Penalties can apply if [blank_start]returns[blank_end] or [blank_start]accounts[blank_end] are filed late. There can also be penalties for not notifying [blank_start]HMRC[blank_end] of company's [blank_start]liability[blank_end] to corporation tax or for [blank_start]submission[blank_end] of incorrect corporation tax return & for failure to keep [blank_start]records[blank_end]
1. Areturns
2. Baccounts
3. CHMRC
4. Dliability
5. Esubmission
6. Frecords

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Description: User has deleted their subject information Quiz on Lecture 7- Corporation tax, created by Deleted user on 12/07/2021.
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History: Created on 12 Jul 2021 · updated on 12 Jul 2021
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Lecture 7- Corporation tax

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