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Corporate tax liabilities – what can be done in the current environment?

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Lucy Mangan - Menzies Accountant

Lucy Mangan – Business Tax Specialist

The Government have announced various measures to help businesses in the current climate but at the date of writing there are no specific measures relating to corporation tax payments.  

Time to pay arrangements

Although there are no specific tax holidays or delays to the normal payment dates the general time to pay arrangements will apply to corporation tax and our feedback to date is that HMRC are being very flexible with these arrangements.

Other practical things that could help

There are however some practical things that can be considered to aid cash flow:

Review instalment payment calculations

If your company/companies fall within the quarterly instalment regime and normally pay your tax in advance of the year end,  consider carefully the calculation of these instalment payments.  Your projected taxable profits may be reduced therefore reducing any tax payments required. 

Overpaid tax 

If you believe you may have overpaid your tax liabilities file your tax return as soon as possible to obtain the refund or it may be possible to write to HMRC to obtain a repayment in advance of the return being submitted. 

Maximise relief

Ensure that you are maximising tax reliefs, for example R&D and capital allowances to reduce tax liabilities and perhaps even tax refunds.

Consider extending your accounting period end

If your profits will be impacted negatively in the next few months consider whether extending your accounting period end could help.   It may be possible to extend to up to a 18 month period which could smooth out the profits over a longer period.  Whilst this would not change the overall corporation tax that would be payable it would delay part of the payment therefore providing a cash flow advantage.  It would also delay the filing deadline of your accounts which may take some pressure off the company.

Accounts

The starting point for taxable profits is the accounts profit so review certain accounts figures such as provisions for bad debts, stock values,  to ensure these are not overstated thus ensuring book profits and taxable profits are not overstated.  

What will be beneficial for one company may not be for another and it is important to take professional advice, please talk to your local Menzies contact to discuss the above and how we can help.

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