CT600 Filings – Here Are The Things To Keep In Mind

CT600 Filings

A CT600 form is a company tax return detailing the corporation tax payable to the HMRC and broadly consists of information related to accounts, computations, reports, and statements furnished by the tax-paying entity.

In order to better understand the CT600 form that is submitted to the HMRC, we will briefly touch on Corporation Tax and Company Tax Return in the UK.

Corporation tax is tax paid by companies in the UK on a percentage of their profits, which is the total turnover for a given financial year minus operating expenses. Although liable to change from time to time, it currently stands at 19% for small businesses.

The corporate tax regime in the UK is applicable to companies that are incorporated (limited by guarantee or shares) and other entities such as associations and clubs. It is not applicable to individuals, partnerships, and trusts.

Since it is a self-assessment system, the taxpayer is responsible for calculating taxable profits. This includes checking if any tax adjustments are needed and if any tax reliefs or other rules apply.

A company tax return comprises a form filed with a tax authority in the UK in which a qualifying taxpayer declares their income, expenses, and other tax information.

Whom does it apply to?

Reporting annually on the health of their business to a regulating authority is a legal obligation for all businesses in most countries and the UK is no different in this regard. The submission of the CT600 form to the HMRC allows for the submission of a corporate tax return enabling qualifying entities to pay corporation tax as a percentage of their profits.

So whom is it applicable? The CT600 form is applicable if you are:

  • A registered company – any limited company or a foreign company with an office or branch in the UK
  • Trading but not incorporated – this includes trade associations, housing associations, cooperatives, member clubs, and societies

A qualifying entity will usually receive a notice to deliver a company tax return from the HMRC regardless of whether the company is loss-making or has no corporation tax due. The company director is responsible for submitting the company tax return and paying taxes duly even if an external vendor is employed to prepare financial statements and accounts.

What is filed in a CT600 form?

The following attachments will make up the online Company Tax Return pack that is filed through the Government Gateway and consists of:

  • The CT600 form in XML
  • iXBRL-based statutory annual accounts of the legal entity
  • iXBRL-based computation of Corporation Tax
  • PDF-based supporting schedules

Filers require an understanding of the entire process as they need to deal with the following when preparing iXBRL accounts and filing company tax returns via CT600 online with the HMRC:

  • iXBRL creation, conversion, and tagging of entity accounts
  • iXBRL conversion and tagging of corporation tax computations
  • Generating XML files of the CT600 return forms
  • PDF conversion of supporting schedules
  • Filing online (e-filing) by accessing the Government Gateway

When should you submit the CT600 form?

Filers filing the CT600 form will need to be mindful of two aspects namely company tax returns and corporation tax. So let’s break these down:

  • Filing Company Accounts – this has a deadline of 12 months from the end of the accounting period they are covering
  • Payment of Corporation Tax – for businesses with taxable profits < £1.5M*, this has a deadline of 9 months and 1 day from the end of the previous financial year’s accounting period

*Corporation tax is paid in four separate installments and the process differs for larger companies with taxable profits that exceed this figure

Except for a change in accounting date or for the periods where a company starts and ceases, corporation tax is charged for one-year accounting periods. More than one tax return is required if the accounting period exceeds 12 months.

For a new business, it is possible that two Corporation Tax accounting periods exist as a single period cannot exceed 12 months in length. This means you may potentially end up with two sets of Company Tax Returns even though Companies House will need only one set to be filed.

While the first accounting period will cover the first 12 months after inception, the second one will cover the rest of the remaining time till the end of the calendar year. This will regularize to just one Company Tax Return in subsequent years and qualifying entities will receive a “notice to deliver” from the HMRC apprising them about due payments.

An inability to file on time can attract significant penalties. Below is a schedule of charges:

How do you submit a CT600 filing?

Having already outlined the 4 key components of the Company Tax Return pack that is filed through the Government Gateway, let’s take a closer look at some of the key info that needs to be entered while completing the CT600 form:

  • Company information – involves filling in basic company information
  • About this return – involves stating to which accounting period the return relates and if the accounts relate to the stated period or a different one
  • Tax calculation – involves stating the company turnover from the PNL account and calculating corporation tax due for the respective period
  • Income – involves stating income received by your business including adjusted profit from the corporation tax computation, income from non-trading loan relationships, property income, and trading losses brought forward and offset in the current accounting period
  • Profits before deductions and reliefs – pertains to the amount on which corporation tax is liable allowing you to also state particular types of losses
  • Chargeable gains – allowing you to state the increase in an asset’s value between the time it is purchased and sold, as well as allowable losses
  • Deductions and reliefs – allowing you to state any trading losses, expenses, capital allowances, and reliefs

Corporation Tax allowances are deductible while calculating total tax owed and pertain to costs incurred for the singular purpose of running your business. There are quite a few Corporation Tax reliefs available to businesses as well that can aid in reducing tax liability.

Since the entire filing process can be complicated, involving the conversion of financial statements to iXBRL, a lot of companies outsource this activity to a certified vendor.

Fin-X Solutions® is an HMRC-recognised iXBRL managed tagging services vendor and application provider offering a compelling choice for UK companies to outsource their iXBRL tagging and conversion process. We have been involved with XBRL filings in the UK for over a decade and provide our product and services in many other jurisdictions including the US, Ireland, the EU, South Africa, the Middle East, Malaysia, and many more.

Fin-X Solutions – The perfect partner for all your iXBRL tagging needs