When to Post Corp Tax Liability.....

[prozak]

What is the best practice for posting corporation tax liabilities?

I have been doing it at year end - based on my own estimate and then adjusting out the balance if the return disagreed.

What is best practice?

When I do the returns or at year end?

The reason I ask is that next year there are some big capital items that will mean I do not owe any tax.... so my estimate at year end would be different to the actual when the return will be submitted.

Thanks.

[GlenW]

What does your accountant say?

[Scruff]

What is the best practice for posting corporation tax liabilities?

I have been doing it at year end - based on my own estimate and then adjusting out the balance if the return disagreed.

What is best practice?

When I do the returns or at year end?

The reason I ask is that next year there are some big capital items that will mean I do not owe any tax.... so my estimate at year end would be different to the actual when the return will be submitted.

Thanks.

Big Capital Items are just that...You can write them down using wear & tear (depreciation) but their Capital Value is not (usually) a full deductible?

You should provide a Tax Computation in your return, which is only completed annually.

Profit before taxation 30 000
Add back
Entertainment 10 000
Depreciation 2 000

Less
Wear & Tear 2 500

Taxable Profit 39 500

Calculate the Taxation payable on this amount

Actually - get your Accountant to do this for you, since it is part of his remit and Professional Services.

[northernladuk]

What does your accountant say?

[ContrataxLtd]

What is the best practice for posting corporation tax liabilities?

I have been doing it at year end - based on my own estimate and then adjusting out the balance if the return disagreed.

What is best practice?

When I do the returns or at year end?

The reason I ask is that next year there are some big capital items that will mean I do not owe any tax.... so my estimate at year end would be different to the actual when the return will be submitted.

Thanks.

Hi Prozak

Personally, we do the corporation tax return at the same time as the accounts so that we have an accurate figure to put in the accounts, thus not needing to adjust year on year for any differences that could arise. However, I know quite a few firms will use an estimate for corporation tax for the accounts purposes and then adjust the following year if the CT600 produced a different figure.

If you know you're not going to have a corporation tax liability and don't want to do the return at the same time as the accounts then just don't post a liability when doing the accounts.

Hope this helps.

Martin
Contratax Ltd

[prozak]

Thanks Martin.

[prozak]

Big Capital Items are just that...You can write them down using wear & tear (depreciation) but their Capital Value is not (usually) a full deductible?

You should provide a Tax Computation in your return, which is only completed annually.

Profit before taxation 30 000
Add back
Entertainment 10 000
Depreciation 2 000

Less
Wear & Tear 2 500

Taxable Profit 39 500

Calculate the Taxation payable on this amount

Actually - get your Accountant to do this for you, since it is part of his remit and Professional Services.

Sorry you are totally off track.

The value of the asset is depreciated in the accounts.

However the capital allowances effecting your corp tax liability are totally different.

ESPECIALLY at present as you can currently - under the annual investment allowance - claim an allowance of up to 500k in one year.

[prozak]

What does your accountant say?

My accountant says that people who don't seek knowledge about and understand their own business are idiots.

Some procedural / posting best practice escapes me as I am not an accountant - but just relying on an accountant is definitely not best practice on how to run a business.

[GlenW]

My accountant says that people who don't seek knowledge about and understand their own business are idiots.

Some procedural / posting best practice escapes me as I am not an accountant - but just relying on an accountant is definitely not best practice on how to run a business.

So you bolster that accountant's advice by getting more from strangers on an unregulated forum?

[prozak]

So you bolster that accountant's advice by getting more from strangers on an unregulated forum?

You have been here for a year or so now.

Surely you've noticed how many practising accountants there are?

And surely you have been here long enough to know who offers good advice and who just trolls forums with unhelpful posts and questions?