How to File a Company Tax Return

Filing a company tax return is a legal obligation for directors of limited companies. In order to file, you must first calculate how much corporation tax is due to be paid from the profits earned over the last accounting period (the timeframe a company stipulates it will report on for corporation tax purposes). To file the company tax return, you must complete the CT600 form, provide a copy of the calculations (referred to also as computation) and a full profit and loss report from the company’s annual accounts.

How to fill in the CT600 form

The  CT600 form is accessible online from the Government website. The form is 11 pages long, however not every section will need to be completed by all companies. Below we outline what the main sections cover and what needs to be filled in:

• Boxes 1 – 4: All limited companies will need to enter basic company information such as company name, registration number, tax reference number and type of business.
• Boxes 5 – 8: This section should not yet be completed by anyone. It has been added in preparation for when Northern Ireland introduce a devolved rate.
• Boxes 30 – 35: Enter the start and end dates for the limited company’s accounting period.
• Boxes 80 – 85: Tick the relevant box which confirms that you’ll be attaching the accounts and computations for the accounting period specified in boxes 30 – 35 or for a different accounting period
• Boxes 145 – 150: This part of the form asks limited companies to submit the total turnover from trading or allows you to put an ‘X’ in box 150 where there is no turnover figure.
• Boxes 155 – 205: Complete all the relevant sections that apply to declare all income that has been received by the company.
• Boxes 210 – 220: Limited companies also need to declare any chargeable gains which attract capital gains tax. If there are any allowable losses, including any which are being carried forward from a previous period, this is included in this section. The final box is the difference between the two figures.
• Boxes 225 – 235: The final box in this section is the amount of profit before other deductions and reliefs, but prior to this, you are able to enter amounts of losses carried forward and non-trade deficits on loan relationships.
• Boxes 240 – 325: Claim for deductions and tax relief on this part of the form which will allow you to reduce the tax bill.
• Boxes 330 – 440: The tax calculations are entered in this area to summarise how much corporation tax is due to be paid.
• Boxes 975 – 985: Here is where limited company directors need to declare that the information they have provided for the CT600 is complete and accurate to the best of their knowledge.

These are only the key sections, however the CT600 contains more pages and sections that allow for companies to detail supplementary information specific to their own business operations such as claiming for R&D tax credits.

How to file a Company Tax Return

Completing the CT600 form is only one step. The next is to submit this information to HMRC. HMRC will only accept company tax returns in a specific format, known as iXBRL. You can make sure your company tax return is in the correct format by using HMRC’s online service, or you will have to use approved accounting software. To use the online service, make sure you have your Government Gateway user ID and password to hand. You would have received this when you first registered your limited company.

It is usually when people come to submit their company tax return that one of the most common questions is asked: “Can I file my own company tax return?” This is because not all limited companies will be able to use the online service or have access to accounting software. Although in normal circumstances most limited companies will be able to file their own company tax return, many will still choose to use an accountant to file for them due to the complexity and detail involved.

Deadline for filing a Company Tax Return

The deadline for filing a company tax return is 12 months after the end of the accounting period. Limited companies have different accounting periods because they are able to choose a specific timeframe in which to report and pay their corporation tax. Usually the period will span 12 months as HMRC expects tax to be paid for on a year’s worth of profit at a time. In some situations, such as the first year in which a company is incorporated, you may choose to change the accounting period by shortening or extending it. It is possible to shorten the accounting period as many times as you like by a minimum of one day, but the maximum you can extend an accounting period to is 18 months, and you can only do so once every 5 years. Where a company does extend their accounting period to over 12 months, they must still file a tax return that covers a 12-month period, so will be required to file two company tax returns.

Example:

A company incorporates on 1 January 2021 and has chosen 31 March 2022 to be the end date for its accounting period. This time period spans over 15 months in total and so therefore two company tax returns must be filed.

The deadline for filing the company tax return is 12 months after the end of the accounting period and so must be submitted by 31 March 2023. For the first year of incorporation the company will therefore have to submit two company tax returns by this date because their accounting period spans 15 months. The first tax return will cover 1 January 2021 until 31 December 2022 and the second will cover 1 January 2022 until 31 March 2022.

Paying for the corporation tax however has other deadlines. This must be paid by 9 months and 1 day after the end of an accounting period. Therefore, the first corporation tax payment will be due 1 October 2022 which is 9 months and 1 day from 31 December 2021 and the second payment is due 1 January 2023 which is 9 months and 1 day from 31 March 2022.

Going forwards, assuming the company does not change its accounting period, the payment for corporation tax will always need to be paid by 1 January annually and filing of the company tax return must be completed by 31 March annually.

How to make changes to your Company Tax Return

If you realise you have made a mistake on your company tax return and need to make changes, you have up to 12 months after the filing deadline to make amendments. This timeframe is not extended where you have filed your tax return late.

HMRC issues a penalty where changes have to be made to correct mistakes. However, it is still worth doing as they will issue a greater penalty where they discover the mistake themselves rather than where you have brought it to their attention. The amount you will be charged in fines is dependent on the severity and cause of the mistake:

• The mistakes are careless: you could be charged 0-30% of the tax bill if you alert HMRC, or 15-30% if HMRC identify it.
• The mistakes are deliberate but not concealed: You could face fines of 20-70% if you own up, or 35-70% if HMRC discover it.
• The mistakes are deliberate and concealed: you could face fines of 30-100% if you own up, or 50-100% if you get caught by HMRC

If you notice a mistake on your company’s tax return you should amend it as soon as possible by logging into the government’s online services portal and updating the CT600 form with the correct information. Once the information has been updated HMRC will recalculate the tax owed and you must either pay the difference, or if you are due a refund, then it can be arranged via the online portal.

Penalties issued for late filing of the Company Tax Return

Should you miss the deadline to file your company tax return, you will automatically receive a penalty. This amount increases the longer that is left before the tax return is submitted to HMRC:

• 1 day after the deadline: £100
• 3 months after the deadline: A further £100
• 6 months after the deadline: HMRC will estimate your corporation tax bill and add 10% interest
• 12 months after the deadline: An additional 10% added onto the previous amount

Furthermore, if you are routinely late filing your company tax return and it has been submitted late 3 times in a row, the £100 penalties increase to £500 each. If the tax return is 6 months late after the third time, HMRC will contact you informing you how much corporation tax you must pay, called ‘tax determination’ and this cannot be appealed.

If you have a genuine reason to appeal a late penalty, you must submit your reasonable excuse by writing to your company’s Corporation Tax Office.

However, if you are late paying your corporation tax (don’t forget that there is a different deadline for paying to filing!) then you will be charged 3% interest on the amount due to be paid. For larger companies who make a profit of over £1.5 million over a 12-month accounting period, HMRC will require corporation tax to be paid through instalments. If instalments are not paid in time or are deliberately underpaid, then HMRC are able to impose significant penalty charges.

If you have been struggling to complete your CT600 or find it challenging in general to keep on top of annual obligations, you may want to consider our Company Tax Return service.