Summary of UK Corporation Tax - self assessment

Companies have to self-assess their corporation tax liabilities for accounting periods ending after 30 June 1999.

The corporation tax return includes a self-assessment of the company’s tax liabilities for the accounting period, including any tax on loans to shareholders and tax arising under anti-avoidance rules.

Full statutory accounts and corporation tax computations have to be sent with the return.

Unless the Inland Revenue makes enquiries into the return, the company’s assessment is usually regarded as finalised 12 months after the filing date for the return.

Inland Revenue enquiries into the return are subject to rules similar to those that apply to income tax.

Companies are subject to similar rules to individuals for amending returns and making claims for tax reliefs.

If a return is filed late, the company is automatically charged a fixed penalty of between £100 and £1,000, depending on how late the return is and whether lateness is habitual. An additional tax-linked penalty is charged if the return is filed more than six months late. The penalty is based on the amount of tax unpaid at the six-month point and increases if the delay continues.

Interest is charged on CT paid late. Unlike interest on IT, interest on CT is tax deductible and interest on repayments is taxable.

Large companies have to make quarterly payments of CT in the 7th, 10th, 13th and 16th month following the start of the accounting period. Large companies are those with profits of over £1.5 million, reduced where there are associated companies. When a company first becomes large, it only has to make quarterly payments if its profits are more than £10 million.

Quarterly payments are being phased in over four years. For accounting periods ending between 1 July 2000 and 30 June 2001, 72% of the estimated CT is payable by instalments, with the rest due nine months after the accounting date. The instalment proportion is 88% for accounting periods ending between 1 July 2001 and 30 June 2002 and 100% thereafter.

Each instalment is based on the company’s latest estimated CT liability.

Groups can pay instalments on a group-wide basis without specifying individual company’s liabilities.

Companies that are not large have to pay their CT nine months after the end of the accounting period.