Corporation Tax Services Peterborough
What is Corporation Tax?
Corporation tax is a tax that is levied on the profits earned by companies in the UK. It is the responsibility of companies operating in the UK to pay this tax to the government. The amount of corporation tax a company is required to pay depends on its profits for the year, with the rate of tax currently set at 19% flat rate, but it is about to go up from April 2023 to 25% for companies with profits in excess of £50,000.
Who needs to pay Corporation Tax?
Every limited company has a duty to complete an annual corporation tax return. The responsibility for ensuring that corporation tax is paid correctly and on time falls on the company’s directors and senior management. This means that they must ensure that the company’s financial records are accurate and up-to-date, and that all relevant tax returns are filed with HM Revenue & Customs (HMRC) in a timely manner. In addition the government’s Making Tax Digital Scheme will come into effect from April 2026 and will require businesses to keep digital records and filing their corporation tax return online using software. This is already the case for VAT registered businesses. It is now more important than ever to be on top of your corporate taxes to avoid any unnecessary penalties or repercussions of late or missed filings.
Who makes sure you are fulfilling your corporation tax requirements and what are the obligations?
To ensure that companies are fulfilling their corporation tax obligations, HMRC may carry out audits and investigations to verify that the tax paid by the company is accurate – the current % of businesses that are audited varies between 5-10% per year. Companies that fail to comply with their corporation tax responsibilities may face penalties and fines, and in severe cases, legal action.
In addition to paying corporation tax, companies in the UK also have a responsibility to ensure that they are not engaging in any illegal tax evasion practices. This includes making sure that all tax returns are filed correctly and that any tax planning undertaken is in compliance with UK tax laws.
One important area of corporation tax responsibility for companies is transfer pricing. This refers to the practice of setting prices for goods and services sold between different parts of a multinational company. The UK government has strict rules governing transfer pricing, and companies are required to ensure that their transfer pricing policies comply with these rules. Failure to do so can result in penalties and legal action.
Another area of responsibility for companies is ensuring that they are taking advantage of all available tax reliefs and allowances. For example, companies may be eligible for tax relief on research and development spending, or may be able to claim capital allowances on certain types of capital expenditure. It is the responsibility of the company to ensure that they are claiming all relevant tax reliefs and allowances.
Finally, companies also have a responsibility to ensure that they are complying with all relevant anti-money laundering and anti-bribery regulations. This includes carrying out due diligence checks on customers and suppliers, and implementing effective systems and controls to prevent money laundering and bribery.
In conclusion, companies operating in the UK have a range of corporation tax responsibilities that they must fulfil. This includes paying the correct amount of corporation tax, complying with transfer pricing rules, taking advantage of available tax reliefs and allowances, and complying with anti-money laundering and anti-bribery regulations. Failure to comply with these responsibilities can result in penalties and legal action, making it essential that companies take their corporation tax obligations seriously.
Let us help your business with our Corporation Tax services…
LeeP can assist you in this regard, affording you the time to focus on the other aspects of your business growth. We are on hand to help plan the most tax-efficient approach to every aspect of your business and giving guidance on how best to balance your Salary vs. Dividend extraction from your company. Contact us today to see how we can help you with your Corporation Tax
To find out how we can help you, simply complete the form and we’ll be in touch or call 01733 699033
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Director’s tax return