Corporation Tax is a tax on a company's taxable profit. A company being any limited company whether by shares or guarantee, members clubs and associations, trade and housing associations, co-operative groups. A company tax return consists of the completed Corporation Tax Return CT600 and the annual financial accounts and documents which support the tax calculation.

All companies are required by law to maintain records of that company's transactions in a manner that must be adequate to enable the company to produce an accurate Company Tax Return. Company tax records must be kept for a minimum of six years from the end of the accounting period and longer if the accounts are submitted late or being enquired into by the Inland Revenue. Company tax records must include all original sales receipts and purchase expenses. Under Companies Act legislation registered companies must also keep accounting records.

Companies are responsible for calculating their own corporation tax liability and paying the corporation tax without prior assessment by the Inland Revenue. Companies which fail to deliver their tax return by the statutory fling date which is normally 12 months after the accounting period are liable to penalties. An accounting period normally being 12 months - can be shorter but never longer. Should a company submit the CT600 Corporation Tax return form without the accounts then it is treated as not having submitted a tax return form.

Current Company Tax Return Forms

The latest version of the CT600 form for 2007 has been available for download from the Inland Revenue website since 31 August 2007. The Corporation Tax Return Form CT600 Version 2 contains two small changes from the previous 2006 version. CT600 (short) for small companies has an additional box on Page 1 so that a company which is a member of a group other than a small group can identify itself. The same additional box is on CT600 plus a new box on page 3 of the 8-page form so that a company with ring fence profits can show the ring fence profits included in its figure of total profits. There are no changes to other forms in the CT600 series at present and all the CT600 Supplementary Pages published in 2006 remain valid and will probably remain so until at least after the 2008 Chancellor's Budget.

Corporation Tax Rates

While the main rate of Corporation Tax remained at 30% in 2006 and 2007 which will be reducing to 28% in 2008. The small company corporation tax rate applicable to companies with annual profits under £300,000 was increased from 19% in 2006 to 20% effective on profits earned after 1 April 2007 and is set to increase further on 1 April 2008 to 21% and to 22% from 1 April 2009. Corporation Tax on ring fenced profits being income and gains from oil extraction activities or oil rights in the UK and UK Continental Shelf remain at 19% for small companies and 30% for larger companies. Interest is charged on late payments and at a lower rate on instalment repayments of Corporation Tax as is the practice on all late tax payments.

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