Corporation tax 2021/22

Description

Preface Table of examples Table of statutes Table of statutory instruments and other guidance Table of European legislation Table of cases List of abbreviations Chapter 1 Introduction to corporation tax Signposts Corporation tax legislation Company law aspects The fundamentals of corporation tax Company accounts and directors’ duties Taxation and accounts Chapter 2 Trading income Signposts Introduction Trading profits Trade Self-assessment of trading income Net profits from non-trading activities Expenses with a restricted deduction Expenses with a permitted deduction Expenditure in connection with employees Expenses of a specific trade Deductible and non-deductible expenses Receipts not taxable as trading income Receipts taxable as trading income Property income treated as trading income Redress payments for mis-selling Activities treated as a trade by statute Barter trading Appropriations of profit Valuation of stocks and work in progress Change in basis of accounting Post-cessation receipts Illustrative computational example Bodies granted exemption from corporation tax on trading income Charitable donations relief Charitable receipts Mutual companies Members’ clubs Community amateur sports clubs (CASCs) Relief for expenditure on grassroots sport Chapter 3 Capital allowances (plant and machinery) Signposts Tangible fixed assets Plant and machinery allowances Rates of capital allowances What qualifies as plant or machinery Annual investment allowance First year allowance Expenditure on which an FYA may not be claimed Allocation of expenditure between the AIA, FYAs and other capital allowances Fixtures Computation of capital allowances Special rate expenditure and the special rate pool Contribution allowances Leasing Anti-avoidance Chapter 4 Single company trading losses Signposts Trading profits and losses Carry-forward of trading loss Set trading loss against total profits Relief for qualifying charitable donations Terminal loss relief Loss relief restrictions Self-assessment Entitlement to first-year tax credits Chapter 5 Groups Signposts Business structures Accounting and tax treatment of groups Group relief Group relief claims Availability of group relief Group relief compliance Corporate interest restriction Digital services tax Anti-avoidance: transfers of corporate profits Chapter 6 Investment business Signposts Introduction Investment income Management expenses Investments in shares or loan stock Community investment tax relief (CITR) Chapter 7 Property investment Signposts Introduction Trading or investing? Profits of a property business Property losses The lease premium rules Reverse premiums Annual tax on enveloped dwellings (ATED) Non-UK residents’ gains on UK property Specialist investment companies: real estate investment trusts Chapter 8 Buildings and structures Signposts Introduction Structures and buildings allowances Buildings and structures Allowances only available if the business owns the relevant interest in the property Who qualifies for the allowance and how much is it? What is qualifying expenditure? Qualifying activities When does the allowance begin and when does it come to an end? VAT Evidentiary requirements Anti-avoidance The business premises renovation allowance Chapter 9 The Construction Industry Scheme Signposts Introduction Employment status Construction contract Tax deductions from contract payments to sub-contractors Registration for gross payment Verification, record-keeping and penalties Record-keeping Monthly return procedures Cancellation of registration for gross payment Application of sums deducted from contract payments CIS penalties on contractors Security deposit legislation Chapter 10 Close companies and connected issues Signposts Introduction Close companies Connected persons Close investment-holding companies Companies owned by spouses or civil partners Chapter 11 Loan relationships Signposts Company finance Accounting treatment Close companies Trading and non-trading loan relationships Trading loan relationships Loan relationships with an unallowable purpose Non-trading loan relationships Relief for non-trading deficits Pre loan relationship and pre-trading expenditure Costs of obtaining loan finance Connected companies relationships Consequences of connection Groups and consortia Foreign exchange gains and losses Anti-avoidance legislation Company tax return Chapter 12 Intangible fixed assets Signposts Scope pre- and post-FA 2002 Meaning of an intangible asset Corporation tax treatment Prescribed debit and credit adjustments Sale of a chargeable intangible asset Groups Other aspects International aspects Chapter 13 UK Patent Box Signposts Introduction Scope and nature of the Patent Box Qualifying company Qualifying IP rights Relevant IP profits or losses of a trade Alternative ‘streaming’ approach Patent Box from 1 July 2016 Treatment of relevant IP losses of a trade Making or revoking a Patent Box election Anti-avoidance provisions Transferring trades Chapter 14 Research and development Signposts Introduction R&D capital expenditure R&D revenue expenditure Rules specific to SMEs Rules specific to large companies ‘Above-the-line’ expenditure credit for large companies Restrictions on R&D and other reliefs Tax relief for expenditure on vaccine research Claiming R&D reliefs Remediation of contaminated or derelict land Chapter 15 Creative sector tax reliefs Signposts Introduction to the reliefs Film tax relief Television tax relief Video games tax relief Theatre tax relief Orchestra tax relief Museums and galleries exhibitions tax relief Special rules for losses Chapter 16 Chargeable gains Signposts Introduction Basic chargeable gains computation Roll-over relief on replacement of business assets Gifts to charities, etc Gifts of pre-eminent objects to the nation Substantial shareholdings exemption (SSE) Substantial shareholdings exemption for qualifying institutional investors Intra-group asset transfer Special computational provisions Anti-avoidance Losses attributable to depreciatory transactions Restrictions on allowable capital losses Attribution of gains to members of non-resident companies Chapter 17 Buying and selling companies Signposts Buying and selling a corporate business Company reconstructions and amalgamations Trading losses Capital allowances Restrictions on transfer of deductions UK Patent Box European mergers and reconstructions Transactions in securities Clearance procedures Chapter 18 Distributions Signposts Introduction Payments classed as distributions Qualifying and non-qualifying distributions (now distributions to which CTA 2010, s 1100 applies and other distributions) Small company dividend payments Payments not treated as distributions Demergers Purchase by a company of its own shares Striking off a defunct company Surplus ACT Dividends received by companies Exemption of distributions received Relief for underlying foreign tax on dividends Chapter 19 Liquidations Signposts Insolvency Administration proceedings Liquidation proceedings Dissolution by striking off Disincorporation relief Tax avoidance, evasion and phoenixism Chapter 20 Foreign matters Signposts Introduction Company residence UK resident company with overseas income Non-UK resident company carrying on a trade in the UK Non-resident company: UK trading income Non-resident company: UK non-trading income International movement of capital UK company becoming non-UK resident Double tax relief Controlled foreign companies Foreign branch exemption Foreign currency accounting Diverted profits tax Profit fragmentation Chapter 21 Transfer pricing Signposts Introduction Base erosion and profit shifting The UK transfer pricing rules Pre-existing dormant companies Small and medium-sized enterprises Miscellaneous rules relating to transfer pricing Self-assessment Country-by-country reporting Advance pricing agreements Advance thin capitalisation agreements Tax arbitrage Hybrid and other tax mismatches Mutual agreement procedure and arbitration Chapter 22 Self-assessment Signposts Introduction Company tax return Contacting HMRC Duty to keep and preserve records Accounting periods Form CT600 Filing date Online filing Routine enquiry into company tax returns Investigation of tax fraud Appeals procedures Company appeal Alternative dispute resolution HMRC’s litigation and settlement strategy Chapter 23 Rates and payment of corporation tax Signposts Rates of corporation tax How to pay corporation tax Payment dates Large companies: quarterly instalments Late payment interest on corporation tax Group payment arrangements Quarterly accounting for income tax Penalties for failing to pay tax on time Accelerated payments of tax Claims for overpaid corporation tax Difficulties in paying corporation tax Security deposit legislation Chapter 24 Self-assessment penalties Signposts Introduction Penalties for incorrect tax returns Company failure to notify taxable activities Failure to deliver a return by the filing date Penalties for failing to pay tax on time Penalty procedures generally Publishing details of deliberate tax defaulters Managing serious defaulters Tax agents: dishonest conduct Chapter 25 HMRC powers Signposts Introduction to HMRC powers Information and inspection powers Record-keeping HMRC time limits for raising assessments HMRC correction of tax returns Tax debtors Duties of senior accounting officers Disclosure of tax avoidance schemes (DOTAS) General anti-abuse rule (GAAR) Public sector procurement restrictions HMRC action to counter tax avoidance schemes Multilateral co-operation Chapter 26 Accounting and tax Signposts Accounting standards UK GAAP Current UK GAAP FRS 102 FRS 101 Accounting for tax under UK GAAP International GAAP Interaction of accounting and tax principles Amendments to FRS 102 and FRS 105: rent concessions Chapter 27 The year end Signposts Corporation tax computation Tax planning Appendix 1: Retail prices index from March 1982 onwards Index