Corporation Tax
Corporation Tax is a fairly complex form of taxation that all companies can be liable for. You are always best advised to seek the assistance of experts in the field of taxation and Pros Assist will certainly be well placed to help you with this. The basic definition of this tax, as supplied by HMRC, is a tax on the taxable profits of limited companies and other organisations including clubs, societies, associations and other unincorporated bodies. Not all companies are liable for it so it is up to the owners or managing directors to seek out the right advice so that they are not liable for any punitive action from HMRC if it is not paid.
If your company is an ‘active’ business it is very likely that you will be liable for corporation tax. An active company is one that is trading and receiving income from that trade. The opposite of this is a ‘dormant’ company. It is up to you to inform HMRC what the status of your company is so that corporation tax can be applied at the correct level. It is not enough to simply register your status with Companies House.
Where some companies slip up is when the company moves from being dormant to active and the owners of that firm forget to inform HMRC (or ignore their responsibility altogether). You are allowed up to three months to declare this change in status. Timing is very important and corporation tax is due before the company tax return is filed.
HMRC actually accept earlier payments of this tax and will even pay interest on that payment. Conversely a late payment means that interest is levied against your company so it makes good sense to keep this in mind. A good option is to file the company tax return at the same time as settling the corporation tax bill. That way you should ensure that no penalties are every charged.