Self-Assessment for Companies

A scheme for the self-assessment of tax by companies introduced in the UK for all companies with an accounting period ending after 1 July 1999. This includes the timely submission of tax returns and payment of tax liabilities.
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Definition

Self-Assessment for Companies refers to a scheme whereby companies are responsible for calculating and reporting their own corporate tax liabilities to the revenue authorities. This was introduced in the UK for all companies with an accounting period ending after 1 July 1999. Under this scheme, companies must accurately report their financial activities, compute their tax liabilities, and submit their tax returns within strict deadlines.

Examples

  1. ABC Ltd: A UK-based company whose accounting year ends on 31st December must submit its self-assessment tax return by 31st December of the following year. If ABC Ltd is a smaller company, it must pay its tax liability by 30th September of the following year.

  2. XYZ Corp: A large UK corporation with an accounting year ending on 31st March must submit its tax return by 31st March of the following year. However, unlike smaller companies, XYZ Corp must make payments on account instead of paying the entire tax liability at once.

Frequently Asked Questions

1. What is the deadline for submitting a company’s self-assessment tax return?

  • Companies must file their self-assessment tax returns within 12 months of the end of their accounting period.

2. How is the payment schedule different for smaller and larger companies?

  • Smaller companies must pay their tax liability within nine months after the accounting period ends. Large companies are required to make advance payments on account before this deadline.

3. How can a company be classified as ’large’ or ‘small’?

  • The classification is typically based on the size of the company’s taxable profits, with large companies having annual profits exceeding £1.5 million.

4. What are the consequences of missing the filing or payment deadline?

  • Companies may face penalties, interest on overdue tax payments, and possible inspections from tax authorities.

5. Can companies amend their tax returns after submission?

  • Yes, companies can amend their tax returns within 12 months from the original filing deadline.

6. What reports need to be kept for self-assessment?

  • Companies should keep comprehensive records of all financial transactions, including income, expenses, assets, and liabilities.
  • Corporation Tax: A tax imposed on the profits of companies.
  • Accounting Period: The specific time period for which a company reports its financial performance.
  • Tax Liability: The total amount of tax that a company is obligated to pay to the tax authorities.
  • Payments on Account: Advance payments made by large companies based on estimated tax liabilities.
  • Tax Return: A report submitted to tax authorities detailing income, expenses, and other tax-related information.

Online Resources

Suggested Books for Further Studies

  1. “UK Taxation: A Simplified Guide for Students” by Malc Lawry
  2. “Taxation: Finance Act 2020” by Melville, Alan
  3. “Principles of Taxation for Business and Investment Planning” by Sally Jones and Shelley Rhoades-Catanach
  4. “Taxation: Incorporating the 2019 Finance Act” by Peter Rowes and Alan Cox

Accounting Basics: “Self-Assessment for Companies” Fundamentals Quiz

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