Calculating Corporation Tax (Penalty - Non deductable expense for Tax purpose)

[northernladuk]

Quite agree. If people are only going to say "ask an accountant" what's the point? In any case, said it before, but anyone who totally trusts an accountant and does not attempt to understand enough to check his accounts are reasonably correct is an idiot. Some accountants are utter crap.

Absolutely agree. It's a good step to get a professional to do it but isn't the be all and end all. There is a legal obligation on a director to understand and check what he is doing. Shame more people don't. I don't think there is a need to expand 'Ask an accountant' but you would hope by asking one he gets it explained to him and then understands it which is your point.

[xoggoth]

Add back in CT500 to get £1000 for tax purposes

I meant CT600. I assume you have submitted your CT100, CT200, CT300, CT400 and CT500 already.

[a1979raj]

£1000. Gross profit = £900 (turnover less expense). Taxable profit = Gross profit + add back any non-allowable expenses = £1000 (this is obviously simplified - there are other things that can impact your tax calculation).



I can't say for certain as my accountant always does my CT return for me, but I would have thought you'd simply exclude the £100 entirely when entering your deductions into the CT600 calculator. It's an expense as far as your company accounts are concerned but for the purposes of the CT600 it just doesn't figure (i.e. the expense comes out of your post-tax profits).

Thank you. Much Appreciated.

[a1979raj]

The question is whether your CT is based on £1000 or £900, and it's £1000. I had the same with a £100 CT penalty, but unfortunately I can't remember what I did. I do remember I was using the paper form, which is considerably easier and doesn't refuse to let you continue because something doesn't add up without telling you what's meant to add up.

If your taxable profit is coming out at £1100 that suggests you're putting in £1000 where you should be putting in £900 - i.e. £900 is the profit from the balance sheet/P&L statement and you add on the £100 non deductable expense.

Don't let the "ask your accountant" trolls bother you.

Thank you very much. Much appreciated.

[a1979raj]

Quite agree. If people are only going to say "ask an accountant" what's the point? In any case, said it before, but anyone who totally trusts an accountant and does not attempt to understand enough to check his accounts are reasonably correct is an idiot. Some accountants are utter crap.

Anyway, in the accounts to companies house, you count penalties, fines etc as an expense and deduct from profit as any other. However, they are not allowable as corporation tax deductions, so you add the amount back to the profit for CT600.

Your taxable profit can't be greater than turnover! Presumably you have not deducted this fine when arriving at your original profit. Sounds like your profit (in accounts) should be £900. Add back in CT500 to get £1000 for tax purposes.

Thank you very much. Much appreciated.

[a1979raj]

Thank you.

Thank you to everyone trying to help.

[a1979raj]

Thank you.

One more thing. for those thinking I am trying to save accountant fees.

I paid a fortune to an accountancy firm last year. I thought they would be good as they have an office near Canary Wharf. After they (their trainee did all data entry in accounting package) completed my accounts, I asked how did you decide which number to round up and which number to round down. And the answer I got was - "Software does it and I need not worry about it. its all automatic.". So my understanding for this year is - its still cheaper to pay 100 VAT Penalty then an accountant who charges an arm and a leg for their underpaid trainees to do my accounts.

And please... If you are an accountant please do not advertise yourself in reply here as I am NOT looking for an accountant. If I was looking for one, I would have asked.

Thank you once again.

[a1979raj]

One more thing. for those thinking I am trying to save accountant fees.

I paid a fortune to an accountancy firm last year. I thought they would be good as they have an office near Canary Wharf. After they (their trainee did all data entry in accounting package) completed my accounts, I asked how did you decide which number to round up and which number to round down. And the answer I got was - "Software does it and I need not worry about it. its all automatic.". So my understanding for this year is - its still cheaper to pay 100 VAT Penalty then an accountant who charges an arm and a leg for their underpaid trainees to do my accounts.

And please... If you are an accountant please do not advertise yourself in reply here as I am NOT looking for an accountant. If I was looking for one, I would have asked.

Thank you once again.

Oh, just in-case there are any curious souls who would rather invest their precious time and dignity asking me to learn basic math. let me clarify - It was not straight forward mathematical round up or down. It was rounding up or down values that would nornally be rounded down or up in that order - if you get the drift.

[aoxomoxoa]

One more thing. for those thinking I am trying to save accountant fees.

I paid a fortune to an accountancy firm last year. I thought they would be good as they have an office near Canary Wharf.

Ah. So that's what people mean by due diligence. Now I understand.

[Scruff]

OP is getting touchy, please don't?

I think that you have been given all the advice that is available, for free. I can't seem to have found any Accountants advertising there services, but I may be wrong?

This is the Accounting / Legal part of the Forum, and they do hang out here, with the best intention of assisting and not advertising. Hopefully you will have obtained the best advice and you may choose to engage their services based upon your judgement?