A company resident in the UK is subject to corporation tax on its worldwide income and gains, whether or not these are remitted to the UK. A company not resident in the UK may also be within the corporation tax regime if it carries on activities through a UK permanent establishment or deals in or develops UK land. The rules around UK tax residence and what constitutes a permanent establishment can be complex.
From 6 April 2020, non-resident companies receiving rent from UK property are also subject to corporation tax instead of income tax as previously and may now be required to file corporation tax returns.
Companies subject to corporation tax are required to prepare and submit to HMRC a Company Tax Return (Form CT600) with accompanying computations and financial statements, which are all filed online in iXBRL format. A return is due for each accounting period, which will often be the same as the period of account for which statutory accounts are drawn up, though this is not always the case.
We treat tax compliance with the intelligence it demands. This is essential to give you confidence in the accuracy of the returns. We provide a tax compliance solution that is easy to use through updated technology platforms that deliver tax efficiencies and comply with current tax practice. Our tax compliance approach is geared to the early preparation of tax returns with minimum fuss.
How we can help
Our team of tax specialists will tailor the service to the precise needs and risk profile of your business. We assist numerous businesses with a wide range of corporation tax compliance offerings, all designed to meet the needs of the business. Examples include:
- Registering: determining whether or not your company is within the corporation tax regime and assisting with all aspects of the registration process
- Returns: preparing or reviewing corporation tax computations and returns, related submissions such as Corporate Interest Restriction (CIR) returns and ensuring correct disclosure
- Provisions: preparing or reviewing tax provisions and notes for inclusion in individual company and consolidated group statutory accounts under UK GAAP and IFRS accounting standards
- Interim reporting: managing your interim tax reporting for accounting purposes
- New legislation: providing guidance and advice on complex and developing areas, including loss restrictions, CIR rules, anti-hybrid rules, transfer pricing and research and development (R&D) tax credits
- Liabilities: monitoring and advising on tax liabilities and due dates of payment for corporation tax
- Planning: ensuring tax attributes, such as group relief and capital allowances, are utilised effectively across a group
- Claims: monitoring, advising on, and preparing potential claims and elections for particular tax treatments to apply to profits and gains
- In-house tax team: provided when your resources are stretched
Frequently asked questions about tax compliance
When do we need to file a UK corporation tax return?
A company within the charge to UK corporation tax is usually required to submit a Company Tax Return to HMRC 12 months after the end of its accounting period. For example, a UK company preparing accounts for the year ending 31 December 2021 would usually need to file its return with HMRC by 31 December 2022.
When do we need to pay the corporation tax?
Even though a corporation tax return is not due until 12 months after the end of the accounting period, the payment deadline is almost always earlier. The exact dates will depend on the company’s taxable profits in the prior and current period, the number of companies in the worldwide group and the length of the taxable period.
For a standalone company with a 12-month accounting period and annual profits not exceeding £1.5 million, corporation tax is usually due for payment nine months and one day after the year end. If its profits were between £1.5 million and £20 million it would usually be required to pay in four Quarterly Instalment Payments (QIPs) spanning the year end. If its profits were more than £20 million it would usually be required to pay its QIPs earlier, entirely within the year: sometimes referred to as ‘accelerated QIPs’.
Group Payment Arrangements (GPAs) are also available for groups of companies and may help to reduce the administrative burden associated with making a large number of individual payments. In some cases, overall interest charges may also be reduced.
Can we refile our corporation tax return if we make a mistake?
Yes. A company can submit an amended corporation tax return at any time up to 12 months after the statutory filing deadline. This does, however, extend the timeframe HMRC has to enquire into the tax return. Notice of enquiry into the amended return can be given at any time up to 31 January, 30 April, 31 July or 31 October that follows the first anniversary of the day on which the amendment was made. If you realise you need to amend the return after this 12-month period, there are only limited circumstances in which an adjustment can be made, and you should seek further advice.
Will I be charged a penalty if I file my corporation tax return late?
Yes. For a company missing a filing deadline for the first time, flat-rate penalties starting at £100 will initially be imposed. Additional tax-geared penalties are charged if a return remains outstanding for longer. Higher penalties may apply for companies that fail to meet a filing deadline for multiple years.
What is the current rate of UK corporation tax?
The main rate of UK corporation tax is currently 19%. This applies to all corporate income and gains and will remain in place until 1 April 2023, when it is scheduled to increase to 25% for companies with profits over £250,000. Companies with profits between £50,000 and £250,000 will be taxed at a tapered rate between 19% and 25%.
This tax rate is applied to taxable profits, which are the accounting profits of a company, amended for UK tax reliefs and restrictions. There are a significant number of tax reliefs available in the UK to reduce taxable profits. You should seek further advice on these when preparing the corporation tax return.
Different rates apply for ‘ring fence’ companies, which are those that make profits from oil extraction or oil rights in the UK or on the UK continental shelf.
How is a corporation tax return filed online?
Subject to fairly limited exceptions, all corporation tax returns must now be filed online. Returns must be accompanied by a copy of the approved, full company accounts for the relevant period, presented in Inline Extensible Business Reporting Language (iXBRL) format. This format is used for ‘tagging’ purposes, so that the nature of the items in the accounts is identified in a standardised way.
We can assist with all aspects of the preparation and submission of corporation tax returns, including preparation and iXBRL ‘tagging’ of statutory accounts.
How long does HMRC have to enquire into a corporation tax return?
It depends on the size of the company or group. Where a return was originally filed on time:
- for a standalone company that is not ‘small’ or a member of a group that is not ‘small’, the time limit is 12 months from the statutory filing deadline; and
- for small companies, the time limit is 12 months from the date of receipt of the return
When considering whether or not a company is small, the entire group must always be considered. Size is determined by reference to particular thresholds for turnover, gross assets and staff numbers.
Enquiry windows are extended where returns are filed late, or where returns have been amended and resubmitted.