Tx notes fa22 Final

Discuss the elections available to the group companies and how they may best be used. 

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Chapter 23
SELF ASSESSMENT AND PAYMENT 
OF TAX FOR COMPANIES 
1. Corporation tax – payment dates 
1.1. Notification of chargeability 
A company falling within the scope of corporation tax for the first time must notify HMRC when its 
first accounting period begins, within 3 months of the start of the accounting period. Failure to notify 
chargeability to tax within 12 months of the end of the accounting period will lead to a standard 
penalty based on a percentage of the tax unpaid 12 months after the end of the accounting period. 
The standard penalty is discussed in chapter 25, (VAT Section 8.1).
1.2. Payment of tax 
(a)
Estimated tax is 
payable 9 months and one day
after the end of each accounting period (due 
date), with provisions for quarterly instalment payments for ‘large’ companies. Payment must 
be made electronically.
(b)
Interest due to the HMRC on tax paid late will run from the due date to the date of payment at 
a rate of 3.25% per annum.
(c)
Interest on overpayments of tax will run from the later of the due date or the date tax was 
actually paid at a rate of 0.5% per annum.
(d)
Under self assessment interest on tax paid late will be deductible against interest receivable.
Interest received on overpaid corporation tax will be taxable as Interest receivable
1.3. Quarterly Instalments 
(a)
Quarterly instalments apply to large companies.
(b)
A 
large company
is one with a profit exceeding £1.5M based on a single company with no 
related 51% group companies and which prepares accounts for a 12 month period. The profit 
limit must be divided by the number of related 51% group companies and time apportioned for 
a chargeable accounting period of less than 12 months.
(c)
The instalments are based on the estimated current year’s liability.
(d)
The four quarterly instalments will be made in months 7, 10, 13 and 16 following the start of the 
accounting period. The instalments are due on the 14th of the month. Thus for the accounting 
year ended 31 March 2024 the first quarterly instalment payment would be due October 14, 
2023 followed by further payments due January 14, April 14 and July 14, 2024
(e)
Quarterly payments are not required if:
‣
current profits do not exceed £10 million 
and
‣
the company was not large in previous AP.

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