Corporation tax is a form of taxation that companies have to pay based on the profits that the company makes in any given tax year. This tax is paid by:
- Limited companies
- Clubs, associations and societies
- Housing associations
- Trade associations
It is the responsibility of the business owner here to inform the relevant body (HMRC - HM Revenue and Customs) that your business needs to pay corporation tax. Failure to do so can result in heavy fines and interest charges being added to the amount that you owe. You also need to make sure that you file a tax return, keep all relevant records and pay your tax when it is due. So, you need to plan to get your tax return in by the statutory filing date and to arrange payment by the normal due date.
It is also your legal obligation to make sure that you keep receipts, expenses, sales and purchases and any other relevant information so that you can make your tax return correctly and so that it can be checked if necessary. You need to keep your records here for a minimum of 6 years.
In order to file a tax return for corporation tax you will need to know:
- How much profit (taxable) your company made.
- What other income your company made - i.e. profits on chargeable gains when selling an asset.
- What capital allowances you can claim if you have purchased something for your business.