Corporation tax - accounts date

Re:Corporation tax - accounts date

Thanks Dean. I know it sounded like such a dumb question, but after studying AAT for companies that run from year to year I was flummoxed when it came to a company that had been dormant for the first two years and then started trading part way through! Sometimes you just need someone else to say it to confirm what you are thinking in a 'real life' situation rather than in a paperwork question.

Thanks again.

Re:Corporation tax - accounts date

I think there is a slight confusion here between filing deadlines in relation to Companies House requirements and HMRC.

Companies who remain dormant cannot pay Corp. Tax on "profits", or even carry back/forward "losses" they haven't yet made. However, Annette is correct in that accounts are made up from the date incorporation begins. In the Directors Report there are two sections (1) the date of incorporation and (2) the date trading commences. This is usually found at the top of the Directors Report in a set of Limited Company FSs.

However, the incorporation date is different to the trading date.

There cannot be a gap between two accounting periods and therefore if a company was incorporated on 1 February 2003, didn't start trading until 1 February 2004 then (for Corp. Tax purposes the CT600 would run 1/2/04 to 31/1/05) but for Companies House purposes the year would START from 1 February 2003 year on year. Similarly, if it remained Dormant, the year end would simly be 1/2 to 31/1 - a Dormant Balance Sheet filed at Companies House and a letter written to HMRC informing them that the entity was dormant.

Dean is assuming filing deadlines in accordance with companies house though filing deadlines for CH are different from Revenue (10 months filing deadline for Annual Return [Co's Hse] 12 months filing for Corp Tax Return [HMRC]). In practice it is usual when the Company remains dormant, but subsequently begins to trade, to change its year end and therefore extend/shorten its accounting period (as per Annette) - in which case filing deadlines subsequently alter. Please note, Companies House and HMRC are NOT linked. Neither one of them are concerned with eachothers rules.

In the case of the original thread. If the year end was extended then this would cover 2 Corp. Tax periods which I think Annette was trying to say. Please note a Corp. Tax return can only cover a maximum of TWELVE months. If the year runs MORE than twelve months (i.e. if the year has been extended) then TWO Corporation Tax returns have to be done. For your scenario:

Assumptions
Originally: year end = 31 Oct 04 and 31 Oct 05 (you say traded 2 years dormant)
Resolution to trade from Jan 06 .: trade from Jan 06 to March 07
Year end extended to 31 March 07
Traded from 1 Jan 06 with a year end of March 2007

Therefore you would have 2 CT returns the first being from 1 January 2006 to 31 December 2006 (the first accounting period) and then from 1 January 2007 to 31 March 2007 (the second accounting period). The Corporation tax would have to be paid by 1 January 2008.

Annual returns would have originally been due from October to August but as the year has been extended these would now be expected in January.
Kind regards
Ste

Re:Corporation tax - accounts date

Filing dates are sometimes tricky. I told a client (yesterday in fact) the wrong filing date!! I, myself, used the Corporation Tax deadline instead of the Cos House deadline - but then again it was one of those days yesterday (computer crashes, mad clients ringing up and the like).

Best regards
Steve

Re:Corporation tax - accounts date

Hi everyone.

Thanks for expanding on that Peugeot. And Dean, yes, I did understand what you meant. Wasn't sure what date I should put on the Corporation Tax review form for dates to be made up to. Am I right in putting 01/04/05 to 31/03/06 then as last (Dormant) accounts to 31/03/04; and trading started Jan 06? Trading will be below corporation tax limit.