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Why should you read this guide?

If you operate a company or another organisation that is liable to Corporation Tax there are various rules that you must follow. You will also need to pay an amount of tax if your company makes profit. This guide will tell you who is liable for Corporation Tax, how to calculate it and pay it.

Background

When you set up a company you need to inform HMRC of this and that you are liable to pay corporation tax. It is not only companies that are liable to pay this you will also need to register if you are - club, society, association, trade association, housing association or a group of individuals not trading as a partnership. All trading organisations are due to pay some form of tax on any profits made for sole traders and partnerships this mainly falls into normal income tax and can be calculated on a self-assessment basis on your tax return.

What you need to do

Once you have registered your company with HMRC you are responsible for paying Corporation Tax without further assessment by HMRC. You will have decided on your 12 month trading period and the tax is payable from the profit made within that period. You are also responsible for calculating your Corporation Tax liability although it is likely you will have your accountant to do this for you. You must file a return stating your liability within 12 months of your financial year-end. Failure to do this will incur penalties and interest on the payments due.

The Corporation Tax return

You will need to complete and return form CT600 and any supplementary information along with a set of your accounts detailing the calculations that you have made. There is now a short form that can be filed which is half the size. This for small businesses or organisations mentioned above. As long as you are able to provide all of the information within this form you are able to file this instead.

The form must be completed within 12 months of your financial year-end and sent along with the information above to your tax office. If you do not provide all the information within the time frame required then you may be penalised from £100 up to £1000.

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