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Taxation - Essay Example

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Taxation

Corporation tax is governed by the Income and Corporation Taxes Act 1988" (2007).
A limited amount of companies must pay corporation tax. The self-employed do not. However, in almost all circumstances, cooperatives, housing associations, members' clubs, and trade associations must pay corporation tax (Wikipedia, 2007).
Companies that are obligated to pay corporation taxes on their profits are required to perform certain activities. First of all, they are required to notify HM Revenue and Customs that they indeed are in operation at that they are among those required to pay corporation taxes. Then, the company must file a self-assessment Company Tax Return without being assessed by the HMRC, similar to individuals who are required to file their own income taxes without first being assessed by the IRS. Lastly, this requires that accurate records of all financial dealings that contribute to the information submitted to the HMRC be kept at all times. In order for corporations that must pay corporation tax to avoid fines, they must know their statutory filing date and their normal due date.
Each company must hold full responsibility for calculating its own corporation taxes and paying the amount due before the deadline. If a company fails to do so, they will owe a penalty. According to Business Link, "A company can send in its Company Tax Return at any time after the end of its accounting period but must do so no later than the statutory filing date. This is the later of: (a) 12 months after the end of your company's accounting period [or] (b) three months after your company receives a "notice to deliver a Company Tax Return form CT600" from HM Revenue & Customs (HMRC)" (2007).
Companies who do not send their returns on time receive penalties. Companies who regularly submit their returns late enjoy increasingly higher penalties. Penalties can also be assessed for returns that are incorrect or for companies who fail to tell HMRC that they are liable to pay corporation taxes. Business Link claims that, "Payment of the corporation tax itself is due exactly nine months and one day after what is called your normal due date. For most companies, the normal due date is the last day of the accounting period. So if a company's tax return covers the accounting period 1 January 2004 to 31 December2004, then the corporation tax should be paid no later than 1 October 2005" (2007).
Relief for Losses
Seabream Limited may choose to obtain relief for the losses that it has incurred as of 31 March 2007 due to falling profits and strong competition. They can choose to seek relief for their total trading losses of (42.000) during the 5th accounting period listed. The rules regarding corporation tax loss relief in the United Kingdom are extremely complicated. According to Wikipedia, "A company may elect to set the Case I losses arising in an accounting period against other taxable profits arising in the period3. If there are still unutilised Case ...Show more

Summary

According to Wikipedia, "Corporation tax is a tax levied in the United Kingdom on the profits made by companies and associations that are resident for tax purposes, and on the profits of permanent establishments of non-UK resident companies and associations that trade in the UK" (2007)…
Author : carmenrussel
Taxation Essay essay example
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