Corporate tax returns can seem daunting if you have never had to complete them before. You must understand what you need to do and what deadlines you are required to meet, to avoid any fines or penalties.
In this short guide, you will gain a better understanding of HMRC corporation tax returns for 2021.
What is a corporate tax return?
The corporate tax return, also known as a company tax return, is a report of all the spending, profits, and tax information of a business required by HRMC. A corporate tax return is completed by limited companies in the UK to calculate and ensure the correct level of tax is paid. Currently, the corporation tax rate is 19% for limited companies and is subject to change. The specific amount your company pays will depend on your profits over your tax year.
It is the responsibility of the company director to register for corporate tax within three months of starting the business and to file the tax return every year. Even if the company outsources the work to accountants, it is still the company director’s responsibility to ensure all that information is correct and up to date.
When do you need to file a tax return?
Unlike self-assessment tax returns, the deadline is within 12 months after the end of the accounting period. Your accounting period is dictated by Companies House, which will provide you with a date upon registration.
You must, however, pay the corporate tax bill within 9 months and 1 day of the end of your accounting period. This means you will have to calculate your corporate tax return earlier than 12 months.
How to file a corporate tax return
To file a corporate tax return, you must complete a CT600 form.
Corporate tax is to be completed online unless you have a reasonable excuse to send it by post or if you are in Wales. If your only option is to send it by post, your application must be accompanied by a WT1 form.
When you make your first corporate tax return, you will be prompted to create a government gateway user ID and password. You must keep this information in a safe place for future returns. Once you have access, you will need your company name, registration number (from Companies House), and details of your accounts. This includes your company’s income, business expenses, and tax allowance.
Your corporate return will ask you to complete the following information:
- Basic company information
- Dates of the accounting period
- Company turnover
- Income received by your company
- Chargeable gains and allowable losses
- Profits before deductions
- Tax calculation
There may be more you have to complete, but it will depend on which questions are relevant to your company.
Once you have completed your HMRC corporate tax return, you will receive a receipt of acknowledgment. HMRC can then update the return if there are any obvious errors, enquire about the return or raise anything they think is incorrect.
If the information you provide is inaccurate or submitted past the deadline, you may be subject to fines or penalties. However, if you have a reasonable excuse for filing your returns late, you can appeal. These excuses are limited to the death of a close relative, an unexpected stay in the hospital, life-threatening illness, or IT issues.
It is important your company is familiar with this process and saves the important deadlines to ensure you are not issued with any penalties.