For many of us, tax returns are a fact of life, alongside council tax, bills, and rent or mortgage payments.
If you own a business, then you’re required to complete a company tax return to give HMRC the financial information they need about your business.
However, you need to understand tax returns before you complete them - to ensure that they’re completed timely and accurately.
But what exactly is a company tax return? And how are they different from personal tax returns?
Keep reading to find out the answer to these questions, as well as information about deadlines and who is required to complete company tax returns.
A company tax return is a document required by HMRC every year, including information about any business earnings, loans, losses, and other factors that may affect the amount of tax they pay.
A company tax return includes a completed CT600 form, information about the company’s accounts, tax computations, and any other relevant documentation.
If your company is a limited company, then you’re also required to file your company accounts - but you can file this at the same time as your tax return as you’ll already have the relevant accounting information prepared.
Many businesses have an accountant complete the relevant forms on their behalf, including tax returns. Upon completing the corporation tax return, most business owners will pay the bill there and then. However, you have until the deadline - which we’ll talk about further down the article.
The CT600 form is another name for the company tax return. Any information that you provide in this form must adhere to the Inline eXtensible Business Reporting Language format.
When completing your company tax return, ensure that all information you provide is accurate. If you provide inaccurate information in your tax return, then you risk being investigated by HMRC, fined, or even prosecuted.
It’s important that you file your tax return on time and are aware of the deadlines. If you file your company tax return late, then you’ll be required to pay a late-filing penalty.
If you file your tax return even a day late, then you’ll be charged £100. If your return is late by three months or more, then you’ll be charged an additional £100.
However, if your tax return is six months late, things get a little more serious - HMRC will estimate your tax bill and add a total of 10% of the entire bill as a penalty charge.
If you still haven’t filed your tax return after 12 months, then you’ll get an additional penalty - another 10% of your tax bill.
The deadline for your corporate tax return is 12 months after your accounting period ends. However, the bill is usually 9 months and a day after your accounting period ends.
If your business gets a ‘notice to deliver a company tax return’ from HMRC, then you’ll need to pay your tax return promptly. If you’re not certain when your company’s accounting period is, then you can check on the HMRC website.
If you’re the owner of a limited company, then you’ll be required to file your company tax return after receiving the notice from HMRC - the ‘notice to deliver a tax return’.
However, there are some exemptions. If your business is dormant, then you won’t be required to complete a tax return, as there should be no financial activity within the business.
If you’re in a limited liability partnership (aka an LLP), then you may not be required to file your company tax return if you’re in liquidation, not conducting business to make a profit, or you’re currently being wound up by a court order.
If you’re a sole trader and in a partnership, then you also won’t need to complete a company tax return. However, you will need to report your earnings to HMRC via their portal, as a self-assessment.
Your self-assessment gives HMRC the information that they need about your personal finances to determine your personal tax, whereas company tax returns give HMRC information about your business’s accounts to determine how much tax your business owes.