All UK-based limited companies making taxable trade profits are expected to file their corporation tax return when they receive a notice from the Her Majesty’s Revenue & Customs (HMRC) to deliver a company tax return. Businesses must complete and file their company tax return within the time period allotted by the HMRC so as to avoid penalties. A company tax return comprises details of the financial activities undertaken in a company during the annual corporation tax accounting period. The corporation tax accounting period usually covers 12 months and starts from the moment the company begins trading. Company tax return depicts the total profits a business has made during the corporation tax accounting period, and the amount of corporation tax it is expected to pay on the basis of the profits made. Even if a company has incurred losses or has no corporation tax to pay, it is supposed to file the company tax return with the HMRC. However, individuals who are self-employed as sole traders or in a partnership, do not have to file the company tax return; instead, they must send in a self-assessment return to the HMRC.
It has now become compulsory for businesses to file their company tax return online, for which they will have to register themselves for HMRC’s online services. The company tax return should have the form CT600 along with figures that explain how much corporation tax is owed by the company to the HMRC. The company tax return should also be accompanied by complete details of the profits and losses related to the corporation tax—it should be noted that the profits and losses for the corporation tax are different from the profits and losses explained in accounting books. Companies are supposed to clearly illustrate the calculations and/or computations on the basis of which the final accounting figures are arrived at in the form CT600. For filing the company tax return, businesses are also expected to work out their Corporation Tax Bill. Accountants may be hired for preparing and filing the company tax return, or companies can file their returns themselves. Limited companies have the option of filing their accounts with the Companies House while filing their company tax return.
All company tax returns are to be filed within 12 months of the completion of a company’s tax accounting period. Moreover, the company tax return cannot be filed for a period longer than 12 months. Some businesses have a tax accounting period shorter than 12 months; these businesses can file their returns for the respective number of months. However, some businesses have a tax accounting period that is longer than 12 months. In such scenarios, the business will have to file two separate company tax returns—one for the first 12 months and the other for the remaining months.
The HMRC imposes penalties on companies that fail to file their company tax returns within the mandated deadline. The table below lists the amount charged in penalty along with the number of days for late filing.
|Days Post the Deadline||Penalty Amount|
|90 days||An additional £100|
|180 days||HMRC estimates the Corporation Tax Bill and levies a 10% penalty of the unpaid tax|
|360 days||An additional 10% penalty of any unpaid taxes|
If a business defaults in paying its company tax return on time, three times in a row, the HMRC increases the penalty from £100 to £500. Furthermore, if a company is more than six months late in paying its tax return, the HMRC writes to the company specifying the amount it has to pay as corporation tax. This specified amount is called tax determination, and businesses are not allowed to appeal against it.
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If, for some valid reason, a company couldn’t file its return on time, it can make an appeal against the late filing penalty. For this, the company can write to its corporation tax office.
If the company tax return has been filed incorrectly, the HMRC offers provisions to correct the mistakes. However, such errors or mistakes can be corrected only within 12 months of the company’s tax return filing deadline. For making the necessary changes, businesses can either login to the HMRC online services, or they can write to their corporation tax office. The HMRC may impose a monetary penalty for the errors made, and it may also conduct a compliance check to identify errors in the filed company tax return.
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