Every limited company is required by law to pay corporation tax on their profit. The HM Revenue and Customs (HMRC) will send reminders requesting the filing of your CT600. The reminders would be sent to your registered office. What is CT600? Good question. It is effectively a corporation tax return form. HMRC called it CT600.
This would include the profit and loss account which gives you the profit figure to compute your tax liability. However, if you made a loss, then no tax liability. In simple term, no profit means no tax to pay.
You have nine after your accounting year-end to pay your company tax. Thereafter, you must submit your corporation tax return together with your tax computation to HMRC. You must also include your company accounts. You have 12 months after the accounting year ended to state your final corporation tax bill in your CT600.
Otherwise, your company will receive late filing penalty if failed to file the return on time. There will also be penalty interests on any outstanding corporation tax amount.
Corporation tax for Large Company
A company with an accounting profit of more than £1.5 million is classified as a large company by HMRC and therefore is required to pay its corporation tax in advance in four instalments within a twelve-month period.
There is an exception. Where your company’s accounting profit exceeded £1.5 million but less than £10 million for the first time in your trading year, your company will not have to pay your corporation tax by instalments.
Where there are associated companies or companies within a group, that £10 million thresholds will be divided by one plus the number of associates at the end of the previous accounting period.
The onus is on your company to estimate your accounting profits for the purpose of making corporation tax payments. Therefore, it is important your company have a proper accounting system in place to monitor your profits and business transactions.
Notify HMRC when your company profit is likely to exceed the thresholds. Start making quarterly instalment payments. The unpaid instalment payments carry penalty interest at a special rate imposed by HMRC, from the due date to the date of payment.
There is no excuse for first time oversight. The HMRC will backdate the penalty interest payable based on your final corporation tax return CT600 submitted.
Quarterly Instalments Payments
Instalments are due at the intervals of three months commencing 6 months and 13 days from the start of your accounting period and culminating 3 months and 14 days from its end.
Therefore, for the 12 month accounting period there will be 4 instalments.
For a company with a 12 month accounting period starting on 1 January, Quarterly Installment Payments will be due on 14 July, 14 October, 14 January and 14 April.