Company Tax Return

A Company Tax Return  is the return that must be submitted to HMRC by Ltd Companies after the end of their financial year.

A form called a CT600 is the main part of the Company Tax Return.

A Ltd Company’s financial year can run to the last day of any month of the year, usually initially dictated by the month that the company was incorporated.

The deadline for your Company Tax Return is 12 months after the end of the accounting period it covers. You’ll have to pay a penalty if you miss the deadline.

Interestingly there is a separate deadline to pay your Corporation Tax bill which is usually 9 months and one day after the end of the accounting period. We recommend that all our clients file everything well before either deadline so that they know exactly what they have to pay and when.

You can check when your company year end is on the Companies House website.

Your Company Tax Return (CT600) tells HMRC how much taxable profit your company has made and subsequently the amount of tax you should pay.

Taxable profit and Operating profit can be quite different depending on the allowances and accounting treatments used – so it’s important that you either know exactly what you’re doing, or that you get an expert like Mazuma to do it for you.

Ltd Companies, regardless of their size or how much money they have made, will need to file a Corporation Tax Return (CT600) with HMRC. You’ll be sent a ‘Notice to Deliver a Company Tax Return’ by HMRC which will tell you the date by which you have to file. It’s important that you check that this date is correct and inform HMRC if you think you should be filing to a different date.

There are some Ltd Companies that may not need to file a Company Tax Return if HMRC regards them as ‘dormant for Corporation Tax’

Ltd Companies can file their Corproation Tax Return (CT600) using the HMRC website or by using a piece of third party software. But be warned! You’ll need to submit your Company Accounts to HMRC at the same time. And not just as a pdf, but in a special format called iXbrl. Specialist software can produce your accounts in this format, but we don’t advise that business owners attempt this themselves unless they have experience of producing accounts.

It is always better to get a professional to produce and file your Accounts and Company Tax Return on your behalf so that you can rest assured that everything is correct and you won;t incur any fines or penalties from HMRC for late or incorrect filing.

You need to submit your company tax return within 12 months of the end of the accounting period it covers.

The accounting period is normally the same as your company’s financial year. This could be slightly different in your first year of trading. In fact, it’s not uncommon that your first period of accounting may cover more than 12 months.

Companies House dictates the day for the end of your company’s financial year – this is usually the last day of the month your company was set up. You can change your year end if you need or want to, but bear in mind that you can only do this once in a 5 year period – so make sure that it’s definitely worth it!

Your first accounts will run from the day your company was set up to the following year’s financial year end.

As this accounting period usually covers more than 12 months, you may well discover that you need to file two CT600 returns with HMRC to fulfill your obligations. It’s only for the first year though (unless you switch your accounting year end date) –  in future years, your accounts will run from the start of the financial year through to its end, so only one CT600 corporation tax return will be required.

If that all wasn’t complicated enough, the deadline to pay your corporation tax bill is usually nine months and one day after the end of the same accounting period, even though the filing deadline is 12 months.  So you’ll need to calculate your corporation tax three months before your tax return is due.

In reality, most of our clients have their accounts and CT600 completed and filed well before the deadlines so there’s no worrying about those pesky timing differences.

Fines for late filing can stack up quickly. If you miss the deadline to file your company tax return, HMRC may charge you a fine as follows:

• One day late: £100 penalty
• Three months late: Another £100 penalty
• Six months late: An additional penalty of 10% of your estimated corporation tax bill. HMRC makes this estimate, and you are unable to appeal against it.
• 12 months late: Another 10% penalty of your estimated corporation tax bill.

The more you file things late the worse it gets with HMRC. They do not look kindly on late filing! If your tax return is filed late three times in a row, the £100 penalties will be increased to £500 each.

On top of that there are separate fines charged if you’re late paying your corporation tax bill.

There are a limited number of “reasonable excuses” that HMRC may accept if you want to appeal a penalty. But in our experience filing on time is the best way to escape the scrutiny of HMRC.