Tx notes fa22 Final

June 2023 to March 2024 exams
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Chapter 16
CORPORATION TAX 
1. Introduction 
1.1.
 
Scope of corporation tax 
Companies resident in the UK are chargeable to corporation tax on worldwide income and gains.
A company is UK resident if it is either,
(a)
Incorporated in UK eg A Ltd or V plc, or
(b)
Centrally managed and controlled from UK. e.g. A Inc., which is incorporated overseas, but the 
majority of its directors are resident in UK and board meetings are held in UK.
1.2.
 
Definitions 
๏
A 
period of account
is the period for which a company prepares its accounts. Usually a 
company will prepare accounts for a period of 12 months, but a period of account may be for a 
shorter or longer period than this. This may occur when a company either commences or 
ceases trading, or whenever it changes its accounting date.
๏
Corporation tax is charged in respect of
accounting periods
. Normally a company’s 
accounting period (AP) will be the same as its period of account. This is the period for which 
the Corporation Tax computation is prepared and for which the Taxable Total Profit (TTP) is 
computed. If the period of account exceeds 12 months then 2 corporation tax computations 
will be required, the first for 12 months and the second for the remainder of the period.
1.3. Accounting periods 
๏
Start: 
‣
An AP will normally start immediately after the end of the preceding AP.
‣
An AP will also start when a company commences to trade, or when its profits otherwise 
become liable to corporation tax.
๏
End:
‣
An AP will normally end twelve months after the beginning of the period or at the end of a 
company’s period of account.
‣
An AP will also end when a company ceases to trade, or when its profits otherwise cease 
being liable to corporation tax.
๏
The tax rates to be used however, are set for 
Financial Years
(FY) which run from April 1 to 
following March 31 and are denoted by reference to the year in which they start, hence:
FY 2022 = 1 April 2022 to 31 March 2023, and
FY 2021 = 1 April 2021 to 31 March 2022
For FY 2022, FY 2021 and FY 2020 the rate of corporation tax is 19%.

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