Finance

What To Do If You Receive A Notice to Deliver A Company Tax Return

Allison S Robinson | 13 June 2022 | 2 years ago

 

Company tax return

If HMRC thinks your company is likely to owe corporation tax, it will send a ‘notice to deliver a company tax return’. After you receive this notice, you must send a company tax return – even if you make a loss or don’t owe anything.

So, if you’ve received a company tax return notice then as a business owner you must complete it yourself, or get your accountant to complete it for you and submit this to the HMRC within the correct time period.

All limited companies must complete a Company Tax Return.

As a business owner you should be aware of the following information:

  • how to file a company tax return and;
  • how to pay corporation tax.
Please note that this article has been written as an informative guide. If you have any questions or queries relating to your company tax return or corporation tax payments, then you should seek professional advice.

What exactly is a tax return for a company?

You must report your income, expenses, and the sum of corporation tax owed to HMRC when submitting a company tax return. It entails completing a CT600 form and filing a financial report with equations demonstrating the amount of tax you must pay.

What is corporation tax?

Businesses in the UK are required to pay corporation tax, which is determined by the amount of profit they make each year and is calculated in a manner comparable to how income tax is computed for individuals.

Since April of 2016, the corporate tax rate for all limited companies has been 19 percent. Before this change, the rate would shift according to the amount of money the company made.

Companies, in contrast to individuals, are not entitled to any kind of tax-free allowance; consequently, their profits in their entirety are subject to taxation. You can, however, reduce the amount you owe by claiming a variety of expenses and deductions that are eligible for reimbursement.

Who pays corporation tax?

All UK limited companies must pay corporation tax.

Even if they are not incorporated, the following organisations may be required to pay it:

  • Clubs, societies, and associations with members
  • Trade organisations
  • Housing associations
  • Individuals working in groups to carry out business (such as co-operatives).
Corporation tax is not payable if you operate as a sole proprietorship or partnership. Instead, you’ll file a self-assessment tax return to pay income tax on your profits.

Even if the company hires an accountant to prepare their calculations, it is the responsibility of the company director to ensure that the corporation tax return is submitted on time and the tax bill is paid.

When to submit the tax return for your company

If HMRC issues your business with a “notice to deliver a company tax return,” your organisation is required to submit one of these forms.

It is important to keep in mind that you are still required to file your taxes even if your business has experienced a loss or if there is no corporation tax owed by your company.

The filing deadline is one year after the close of the accounting period that the return covers.

In most cases, the accounting period for your company will coincide with the fiscal year that is the subject of its annual accounts; however, there are some instances in which this won’t be the case, such as the first year that your company will be in business.

If this is the case, you will need to file two tax returns to account for your first year of business.

You can check the end of your accounting period by logging into your HMRC business tax account. If you are unsure of when the end of your accounting period was, you can do this.

How to file a company tax return (CT600)

A business should calculate its own corporation tax, as opposed to individuals, who have HMRC calculate their tax bill based on information provided.

Every year, you must file a company tax return, also known as form CT600. Your accounts must be filed with both HMRC and Companies House, which publicises all registered limited companies’ filing history.

If you have a “reasonable excuse” to file a hard copy or want to submit the return in Welsh, you must do so online.

Your CT600 must contain:

  • company name
  • company registration number
  • registered office
  • tax reference number
  • turnover and profit for the period being reported
  • tax calculation
  • details of allowances and reliefs
There are several pages, but you only need to fill out the sections that are relevant to your company.

You are able to submit these electronically; however, you are not permitted to use the CT600 paper form unless you have a valid excuse or you wish to file in Welsh.

The majority of small businesses won’t be required to undergo an audit because, according to HMRC, this is something that is generally only required of them if their articles of association state that they must or if their shareholders request it.

So, what exactly is a CT600?

Form CT600 is another name for the company’s annual tax return. It will include the typical company information, but in addition to that, you will have to perform some complicated calculations. Depending on the nature of your business, these may include calculations such as:

  • turnover
  • income; including property income, profits, and any trading losses brought forward
  • chargeable profits/gains
  • profits before tax, interest, depreciation, and other deductions
  • exemptions, reductions, and credits
  • reductions and exemptions from taxes
  • tax reconciliation
  • losses
For the accounts and computations section of the company’s tax return, the Inline eXtensible Business Reporting Language (iXBRL) format must be used.

Due to the difficult nature of submitting the return, HMRC has published this CT600 Guide for 2021 to assist proprietors of small businesses.

You should check that out for more information, and once again, keep in mind that many limited companies get professional assistance in preparing their return from tax advisers and accountants.

What if no tax is due?

You are required to file a company tax return at all times, even if there is no corporation tax owed by your business.

Unless you complete the ‘nil to pay’ form, HMRC will send you payment reminders before the due date of your payment when that date arrives. You may also return the payslip attached to the HMRC reminder, which should be labelled with the words “NIL due.”

For the purposes of the corporation tax, you are required to inform HMRC that your business is now considered “dormant” if it has ceased operations. If your request is accepted by HMRC, the organisation will write you a letter stating that you are exempt from paying corporation tax or filing company tax returns.

Corporation tax deadlines

You are required to send in your corporation’s tax return between the date of the end of your company’s fiscal year and the date specified by law as the statutory filing date.

The statutory filing date is the later of either 12 months after the end of the fiscal year or three months after you receive a notice to deliver a return from HMRC. The earlier of these two dates is the date on which the return must be submitted.

On the other hand, you might be required to pay the corporation tax bill you owe before the deadline for filing your return.

In the event that your organisation has realised a taxable profit of any amount up to £1.5 million, you are required to make payment of the corporation tax no later than nine months and one day after the conclusion of your accounting year.

As an illustration, if the last day of your accounting year is March 31, then the due date for your corporation tax payment is January 1 of the following year, and the due date for your tax return is three months after that.

Corporation tax is required to be paid in instalments for companies with a yearly revenue of more than £1.5 million.

What are the consequences of filing a company tax return late for a business?

If you submit your tax return late, you will be subject to financial penalties.

How to Pay your corporation tax bill to HMRC

For businesses that have taxable profits of up to £1.5 million, the deadline for paying your corporation tax bill is nine months and one day after the end of your accounting period. This deadline applies to companies with taxable profits of up to £1.5 million.

You can make a payment by:

  • banking via the telephone or internet, as well as CHAPS (same day or next day payment)
  • Direct Debit; if you’ve set this up already, BACS, online with a debit or corporate credit card, at your bank or building society
  • You are able to make payments for corporation tax through gov.uk.

What are the consequences of making a late payment for your corporation’s tax?

If you don’t make your payment by the due date, the HMRC will start charging you interest from that day forward. This begins the day after you should have paid it and continues until you do pay it in full at some point in the future.

According to HMRC, interest on late payments is tax deductible for the purposes of corporation tax. This “means you can include this expense in your company accounts for the accounting period (or periods) when the interest was incurred,” HMRC explains.

Inaccurate information

If your company’s tax return is found to contain inaccurate information, the HMRC may assess a penalty against your business.

The amount that you are required to pay is determined by several factors, including whether or not HMRC believes the mistake was intentional, whether or not you attempted to hide it, and whether or not you voluntarily admitted to it before HMRC discovered it.

If HMRC decides:

You should be aware that your carelessness could result in a penalty ranging from 0 to 30 percent of your total tax bill if you admit it, or between 15 and 30 percent if HMRC discovers it.

You will be subject to a fine of 20-70 percent if you own up to the inaccuracy, or a fine of 35-70 percent if HMRC discovers it on their own. The inaccuracy was intentional but was not concealed.

The inaccuracy was intentional and was covered up; you may be subject to fines ranging from 30 to 100 percent if you disclose the error, and from 50 to 100 percent if you don’t disclose it.

Generally speaking, you will have to make any modifications to your company’s tax return within a period of one year after the original due date in order to avoid incurring any penalties. You have the option of doing it online, with specialised software, or by mailing a paper return to the office that handles the corporation tax for your business.

You are required to send a paper amendment to Companies House as soon as you become aware of an error or an inaccuracy in your accounts. In this amendment, you must make it abundantly clear that you want the original accounts to be replaced with the new records, that the new records are now the statutory accounts, and that they were prepared as of the same date as the original accounts.

How to Lower Your Corporate Tax Bill

Corporation tax can be a significant expense for some businesses, so it’s important to ensure you’re not paying more than necessary.

Here are three legal ways to reduce your corporation’s tax bill:

  1. Make a claim for your allowable expenses.
All businesses can deduct costs for expenses incurred solely for business purposes. This can include things like meeting train tickets, office equipment, petty cash for tea and biscuits, and other industry-specific items.

Salaries and employer National Insurance contributions are also business expenses that can be deducted from the company’s taxable profits if you have employees.

There are no restrictions on what can and cannot be claimed. You simply need to ensure that the service or item was used ONLY within the business, so solely for business purposes.

By subtracting the prices of these expenses from your business profit, you decrease the amount of tax you must pay.

  1. Make a salary for yourself
Even if you are the only person working for the company, the profits are not yours. As a result, you may decide to pay yourself a salary.

Your salary, like that of any other employee, is a business expense, as are any National Insurance contributions made on your behalf by the company. As a result, by paying yourself, you can reduce the company’s taxable profits.

However, you must pay income tax and employee National Insurance contributions on these earnings.

As a result, it may be in your best interests to keep your wage below the high-rate threshold, or even beneath the personal allowance limit.

Furthermore, many limited company owners prefer to pay themselves in dividends, which are taxed at a lower rate than income tax. Dividends, on the other hand, cannot be deducted as a business expense.

  1. Pay HMRC ahead of schedule.
Fortune favours the organised when it comes to corporation tax. If you pay your tax bill early, HMRC will refund you a portion of it as interest at a rate of 0.5 percent.

In most cases, HMRC will pay interest from the date you pay your corporation tax until the payment deadline. However, it will not pay interest until six months and thirteen days after the start of your accounting period.

Topic

Finance

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