The £3.78 is held on account until used to offset CT owed this year, but once you do that they'll credit another 2p as interest on the interest. Quite tough if you're OCD about getting things to add up. Now I need an extra tab in the worksheet just for "Bank of Hector" with CR and DR and all that.
I dunno why you binned the cheques. Just pay them into the company account and put it down as interest, as if the account itself paid that interest.
Will HMRC still send a cheque if requested? I presumed there was a tick-box on the CT600 that my accountant didn't check this time round but perhaps it's just the way now.
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Reply to: Corp Tax Refund
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Previously on "Corp Tax Refund"
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If its just a refund of an overpayment, then in your books your corporation tax account would show the overpayment as a debit balance, e.g.:
Corporation Tax calculated and accounted for:
DR P&L £10000
CR Corporation Tax £10000
The overpayment:
DR Corporation Tax £10500
CR Bank £10500
Corporation Tax account: -£500
Refund received:
DR Bank Account £500
CR Corporation Tax £500
CT Account Balance: £nil
(I think I've got my credits and debits the right way around there).
So in other words it doesn't have any effect on your tax position, its just a refund to your bank account and a bookkeeping adjustment. Unless the refund also includes interest, in which case it might be something like:
Refund + interest received:
DR Bank Account £550
CR Corporation Tax £500 (balance now £nil)
CR Interest Income £50
The £50 would be included in your taxable income.
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Yeah, if it is interest, it is interest income. If it is a refund of overpaid tax, it isn't interest income. It isn't even income, really. It's a negative amount in your tax expense column, isn't it?
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Originally posted by Darren at DynamoAccounts View PostIf it's interest received from HMRC yes as classed as income however if it is a refund of the CT paid (i.e. overpaid the tax) then no.
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CT Interest
Originally posted by pr1 View PostSo you need to pay tax on overpaid tax? is that right?!
Say profit is £100
CT due is £80
CT paid is £85
refund received is £5
then you have to pay CT on the £5, so money back in company pocket is £4
so you lose out on 20% if you overpay?
(add three zeros to each number if you want to make it more exciting)
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Originally posted by Louisa@InTouch View PostYes this would be classed as interest income into your company.
And therefore taxable - so you will pay corporation tax on this!
HMRC have to get something from the interest they pay you
Say profit is £100
CT due is £80
CT paid is £85
refund received is £5
then you have to pay CT on the £5, so money back in company pocket is £4
so you lose out on 20% if you overpay?
(add three zeros to each number if you want to make it more exciting)
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Yes this would be classed as interest income into your company.
And therefore taxable - so you will pay corporation tax on this!
HMRC have to get something from the interest they pay you
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Corp Tax Refund
OH Hector you little tulip, you will try and make my life a PITA!
Seems HMRC have deemed it necessary that I get a (very) small refund from CT, normally its a cheque that I ignore, however this year they have refunded the money back into my bank account, how would I treat this in terms of my books? Its not a sale as I don't want to pay VAT on it, the only refund option is for VAT not CT, would it be deemed as interest the same as if I got it back from the bank, but again I assume I would then have to pay CT on this amount?
As the refund is £3.78 its a lot of hassle which is why I normally throw the cheque away!Tags: None
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