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Corporation Tax

When a UK limited company commences trading or a dormant company restarts trade, it must register for Corporation Tax.


Requirements

A company will be required to prepare and submit an annual corporation tax return, usually submitted alongside the annual company year-end accounts.

Each corporation tax return can cover up to a maximum 365 days, and usually will do so, but will be in line with the length of the company accounting period.


Adequate trading records must be maintained at all times in order to calculate tax, and kept for a period of 6 years after the end of the accounting period to which they relate.


Notable dates

Importantly, the dates by which payment of the corporate tax must be made to HMRC and the corporate tax return must be submitted to HMRC differ. The respective deadlines are:

• 9 months and 1 day after the reporting period end for payment to reach HMRC

• 12 months after the reporting period end for filing of the corporate tax return


A UK company will need to pay its Corporation Tax on all its profits generated in the UK and abroad. This typically consists of trading profits, investments and gains from selling assets. The prevailing corporation tax rate is then applied to a company’s total taxable profits to arrive at the corporation tax payable for the period.


Whilst this can often be a straight forward calculation, it can also become more complex, as the profits chargeable to corporation tax are different to the accounting profits. This is because accounting profits can include items which are not allowable for corporate tax, such as depreciation of assets.


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