Contractors, have you forgot company tax form CT600?
During the whirlwind month of January, submitting a self-assessment tax return is typically the priority for many a contractor, pushing other obligations to the bottom of the pile and for attention after today -- the January 31st tax deadline.
Due to the flurry of submitting receipts and expenses, too many contractors forget the mandatory requirement of submitting a CT600 form which holds equal importance to the January tax return, writes Keith Tully, partner at RBR Advisory.
What is a CT600?
The CT600 is a company tax return form for corporation tax which is legally required from actively trading limited companies and forms part of your financial reporting duties. HMRC will usually send a notice to deliver a company tax return (CT603) to operational limited companies, essentially reminding them of this legal obligation.
A CT600 should include profit and loss calculations for corporation tax and your overall corporation tax bill. If you have made a loss or have no corporation tax to pay, you will still be required to submit a corporation tax return.
This should be submitted online with supported documents, such as your company accounts and ‘computations.’ These computations refer to the mathematical calculations involved in arriving at the figures in the company tax return.
Who must submit a CT600?
You will not be required to submit a CT600 if you are:
- Self-employed
- A sole trader
- Working in a partnership
If you are classed as any of the above, you will be required to file a self-assessment tax return.
If you are a dormant company and you have informed HMRC of this, you will not be required to pay corporation tax and file returns. If you have received a CT603, a notice to file a corporation tax return, you will be required to submit this to HMRC in order to show that your business is dormant.
When is my company tax return for corporation tax (CT600) due?
You are required to submit your company tax return 12 months after the end of the accounting period that it covers. The corporation tax bill is typically paid nine months and one day after the end of the accounting period, separate to the submission of the company tax return. If you are a limited company, you may be able to file your company accounts with Companies House at the same time as your tax return.
If you fall foul of this deadline, you will be fined the following by HMRC:
| Timescale after your deadline | Penalty amount |
|---|---|
| 1 day | £100 |
| 3 months | Additional £100 |
| 6 months | HMRC will estimate your Corporation Tax bill and add a penalty of 10% of any unpaid tax |
| 12 months | Additional 10% of any unpaid tax |
If you are a consistent offender and fail to submit your return three times, each £100 penalty will increase to £500. If you are overdue by over six months, HMRC will issue a corporation tax estimation, also known as a tax determination, which should be paid promptly. In the event of late filing, HMRC will only accept a ‘reasonable excuse.’
What is a reasonable excuse for late filing?
An excuse will be classed as reasonable by HMRC if it is in relation to any of the following:
- Death of partner or relative
- Developing a serious illness or disability
- Unexpected hospital admission
- Computer or software failure, including HMRC site issues
- Fire, flood or theft
- Unpredictable postal delays
Once the reason behind the delay has been resolved, you will be required to submit your corporation tax return form.
A CT600 form should be strictly filed online. If you fail to submit your form online and have a reasonable excuse, you could qualify for paper submission. In order for HMRC to accept this, you are required to complete a WT1 form which details why a paper form has been used.
Do I need to submit a CT600 if my business is financially struggling?
If your business is facing formal insolvency action, such as a winding up petition, you are exempt from filing a CT600 form. As a result, your business may be undergoing turnaround and operational restructuring, making it difficult to gather the necessary information.
If your business enters administration or administrative receivership, you will not be required to file a CT600. This exemption extends to a Creditors Voluntary Liquidation (CVL), a Company Voluntary Arrangement (CVA) and any provisional arrangements that are in place following a court order.
The exemption will apply during the period before the winding up of the business, prior to the appointment of an insolvency practitioner and during the wind up procedure.
However, if your business is facing informal striking off action as it is solvent, such as a Member’s Voluntary Liquidation (MVL), you will still be required to file a CT600 form. A MVL is when the shareholders of a solvent company agree to voluntarily wind up the company, liquidate assets and distribute the proceeds amongst each other.
A business is legally classed as solvent if it is able to meet financial obligations and the value of company assets outweighs the liabilities. You will need to submit the form in order to illustrate that all tax due has been accounted for, minimising the tax risk for HMRC, ensuring that no tax loss has incurred on their part.
Your accountant will typically prepare the CT600 form while drafting the company accounts, as this usually matches the 12-month financial accounting period. If you are personally submitting the return, you will need to register for an online account.
Final thought
While there is understandably a lot of attention at this time of year on self-assessing with HMRC before midnight tonight, as the director of a limited company, you have a legal responsibility to ensure the submission of financial paperwork like form CT600, even if it is completed by your accountant. The corporation tax return makes up a vital part of your reporting duties and if this is not submitted on time, you could both rack up fees against HMRC and fall foul of your directorial responsibilities.
