Long and short periods of account

By Tolley
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The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Long and short periods of account
  • Short accounting periods
  • Long periods of account

Short accounting periods

Where a company makes up its accounts for less than 12 months, it is necessary (until 31 March 2015, see below) to adjust the corporation tax rate limits on a pro rata basis. For most practitioners no additional action will be necessary as the calculation will be carried out by tax compliance software and the adjusted limits are then used for the purpose of marginal relief and small profits rates. However, it is important to understand the way in which the liability is calculated so that it can be checked and explained if necessary. For an illustration, see Example 1.

CTA 2010, s 24(4)

If a company had a short accounting period together with associated companies, the methodology remains the same, ie ascertain the amended limits and calculate the tax accordingly. See Example 2.

If a company had a short accounting period which straddles a financial year, the normal rules for financial year straddles apply assuming the rates of the corporation tax change between the two financial years. We need to time apportion TTP in order to calculate corporation tax, but only where the rates of corporation tax change between the two FYs.

See Example 3.

From 1 April 2015, the main and small companies’ rates of corporation tax are being unified at 20%, thus applying to all companies irrespective of size, the number of associates, the level of its augmented profits or the length of the accounting period etc. Since one rate of tax will apply, there will be

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