Corporate tax deadlines

 

Corporation tax return filing and claims

Deadline for action: 31 March 2018

Issue: Companies are required to file their corporation tax return and make claims by the relevant anniversary of their accounting reference date. Those with a 31 March 2017 accounting reference date must file their corporation tax return by 31 March 2018 and must also make any relevant outstanding claims and elections for the years ended 31 March 2016 (eg R&D tax relief claims) and 31 March 2014.

Action: Companies with 31 March year ends should ensure their 2017 corporation tax return is filed by 31 March 2018 to avoid late filing penalties. They should also ensure that claims and elections for earlier years are made by 31 March 2018 to benefit from them.

 

Publication of tax strategy

Deadline for action: 31 March 2018

Issue: Large businesses are required to publish details of their tax strategy (including certain prescribed information), on the internet, by the end of their accounting period. Large businesses include multinational groups (with global turnover exceeding €750m), other groups or single UK entities (UK companies, partnerships and permanent establishments) with UK turnover exceeding £200m or gross assets exceeding £2bn.

Action: The head UK entity of a relevant large business with a 31 March 2018 accounting reference date should ensure that it has published the group’s tax strategy, including all prescribed information, in an internet location that is accessible to the public free of charge until the following year’s strategy is published, by that date. Penalties for failure to comply with the requirements start at £7,500.

 

Country-by-country reporting - parent entity notification

Deadline for action : 31 March 2018

Issue: UK companies (or other entities) that are the ultimate parent entity of a multinational group (with global turnover exceeding €750m) are required to notify HMRC that they are responsible for filing an annual country-by-country report to HMRC for an accounting period by the relevant accounting reference date. UK ultimate parent entities of multinational groups with a 31 March 2018 accounting reference date must notify HMRC that they are responsible for filing an annual country-by-country report by 31 March 2018.

Action: Such UK group parent entities with 31 March year ends should ensure their 2018 country-by-country notification is made by 31 March 2018 to avoid penalties.

 

Country-by-country reporting

Deadline for action: 31 March 2018

Issue: UK companies (and other entities) that are the ultimate parent entity (or, in certain circumstances, another member) of a multinational group (with global turnover exceeding €750m) are required to file an annual country-by-country report to HMRC by the relevant anniversary of their accounting reference date. UK multinational group entities with a 31 March 2017 accounting reference date that are not exempted from doing so must file their country-by-country report by 31 March 2018.

Action: Affected UK group entities with 31 March year ends should ensure their 2017 country-by-country report is filed by 31 March 2018 to avoid late filing penalties.

 

Country-by-country reporting - exempt entity notification

Deadline for action: 31 March 2018

Issue: Certain UK companies (and other entities) that are members of multinational groups (with global turnover exceeding €750m) but are exempted from filing an annual country-by-country report must notify HMRC that they, and other group entities, are exempt by their accounting reference date. Such UK multinational group entities with a 31 March 2018 accounting reference date must notify HMRC by 31 March 2018 that the exemption applies and provide details of: the group entity that will submit a country-by-country report; and, all exempt UK group entities. 

Action: Affected UK group entities with a 31 March 2018 year end should ensure their 2018 country-by-country report notification is made by 31 March 2018 to avoid penalties.

 

Country-by-country reporting - exempt entity confirmation

Deadline for action: 31 March 2018

Issue: Certain UK companies (and other entities) that are members of multinational groups (with global turnover exceeding €750m) but are exempted from filing an annual country-by-country report or notifying HMRC of exemption on behalf of UK group entities, must confirm details of the UK notifying entity by their accounting reference date. Such UK multinational group entities with a 31 March 2018 accounting reference date must confirm to HMRC which UK entity has met the notification obligation on their behalf by 31 March 2018.

Action: Affected UK group entities with a 31 March 2018 year end should ensure their 2018 confirmation is made by 31 March 2018.

 

Corporate interest restriction - group reporting company

Deadline for action: 31 March 2018

Issue: Groups of companies with net UK corporate interest expense and other financing costs exceeding £2m are subject to the corporate interest restriction rules from 1 April 2017. Such groups that wish to nominate a group reporting company to submit the group’s interest restriction return for an accounting period (and subsequent accounting periods) must notify HMRC (or revoke an earlier notification) of the eligible UK group reporting company within six months of the end of the accounting period (or 31 March 2018 if later). If no group company is nominated, HMRC will nominate one.

Action: Affected groups with an accounting period ending on or prior to 30 September 2017 that wish to do so, should nominate an eligible UK group reporting company. That company should ensure it is authorised by 50 per cent of eligible UK group companies and give notice to HMRC that it is the group reporting company by 31 March 2018.

 

Corporate interest restriction - group ratio - elections for accounting periods

Deadline for action: 31 March 2018

Issue: Groups of companies with net UK corporate interest expense and other financing costs exceeding £2m are subject to the corporate interest restriction rules from 1 April 2017. When applying the group ratio rule, the corporate interest restriction legislation applies standard rules to determine the relevant group accounting period end date when no group accounts are prepared or the ultimate parent company does not prepare company accounts. The ultimate parent company may elect for a different accounting period end date to apply by that date (or 31 March 2018 if later).

Action: Affected groups should consider whether they wish to apply an alternative accounting period end date for purposes of the group ratio rule calculation. If the group wishes to do so, it should ensure the ultimate parent company makes an irrevocable election by the chosen accounting period end date or 31 March 2018 if later.

 

Corporate interest restriction - election for disregard rules to have effect

Deadline for action: 31 March 2018

Issue: Groups of companies with net UK corporate interest expense and other financing costs exceeding £2m are subject to the corporate interest restriction rules from 1 April 2017. All UK companies in such groups may elect, in calculating their tax-interest income and expense amounts and adjusted tax earnings for purposes of the interest restriction calculation, for the regulations that disregard certain fair value accounting movements to have effect as if the company had made the disregard election.

Action: Affected groups should consider whether it is appropriate to elect for the disregard regulations to apply in calculating the interest restriction amount for UK group companies. If the group wishes to do so, it should ensure all eligible UK companies that were members of the worldwide group as at 1 April 2017 make an irrevocable election by 31 March 2018.

 

Foreign branch profits exemption election

Deadline for action: 31 March 2018

Issue: UK companies with foreign branch profits arising in territories with an effective tax rate lower than the UK rate may benefit from claiming exemption from UK corporation tax on those profits. Companies must elect for exemption, which applies to all profits and losses of all foreign branches of the entity making the irrevocable election , before the start of the first accounting period for which exemption will apply. Those with a 31 March accounting reference date must elect by 31 March 2018 for the exemption to apply from 1 April 2018. 

Action: Companies with foreign branch operations should review all their overseas branch activities before the start of the first period to which exemption would apply to determine the overall impact of making a foreign branch exemption election. Where it is considered appropriate to make the election, companies should ensure the election is filed before the start of the first exempt period.

 

Payment of gift aid by charity subsidiaries for the year ended 30 June 2017

Deadline for action: 31 March 2018

Issue: Companies wholly owned by charities can set gift aid donations paid in the nine months following the year end against taxable profits for the year. Where a charity uses a subsidiary company to undertake non-charitable activities, such as trading, it is possible for the corporation tax that would otherwise be due on the profits to be reduced by way of a gift aid payment of those profits.

Action: Gift aid donations for the year ended 31 June 2017 must be physically paid by 31 March 2018. Subject to available reserves, the amount of gift aid may be based on what would otherwise be the taxable profits so as to ensure that the payment may be optimised, but only non-repayable payments of money, such as a cheque or bank transfer (not book entries on inter-company account), qualify.

 

Diverted profits tax (DPT)

Deadline for action: 31 March 2018

Issue:
 A company generally has a duty to notify HMRC if it is potentially within the scope of DPT. Companies which are potentially within the scope of DPT in an accounting period must notify HMRC within three months of the period end.

Action: Those with a 31 December 2017 year end must notify HMRC if they have profits arising which potentially come within the scope of DPT unless, for example, no charge to DPT would arise for the period. HMRC has confirmed that companies do not have to notify in certain circumstances, but advice should be taken to confirm the position.

 

End of disincorporation relief

Deadline for action: 31 March 2018

Issue: Disincorporation relief, which allows companies to transfer businesses with land and goodwill worth no more than £100,000 to their shareholders (who continue to operate the business) with no immediate corporation tax charge, will cease on 31 March 2018. Such business transfers usually take place at market value for tax purposes, resulting in a corporation tax charge where the market value of the assets transferred exceeds their original cost/tax written down value.

Action: Shareholders who have owned company shares for 12 months and wish to transfer an existing business from the company to themselves, without incurring a corporation tax charge, should do so by 31 March 2018. A claim for disincorporation relief must then be made within two years of the transfer.

 

Corporation tax payment due

Deadline for action: 1 April 2018

Issue: Companies falling outside the quarterly instalment payment regime must settle their corporation tax liability within nine months and one day after the period end. Those with a 30 June 2017 period end that fall outside the quarterly instalment payment regime, or that fall within the regime but have a remaining liability, must settle their corporation tax liability by 1 April 2018.

Action: Companies with a 30 June 2017 period end should calculate their corporation tax liability and make full and final payment by 1 April 2018 to avoid interest on late tax. The increased ‘normal’ rate of interest will apply to tax payments made after 1 April 2018 by companies that fall within the quarterly instalment payment regime.

 

Corporation tax instalment payments due for large companies

Deadline for action: 14 April 2018

Issue: Large companies are generally required to make four corporation tax instalment payments, six months and 14 days after the start of their accounting period and every three months thereafter. Those with a 30 September 2018 accounting reference date are required to make their first corporation tax instalment payment on 14 April 2018. Second, third or fourth instalment payments are due on the same day for large companies with 30 June 2018, 31 March 2018 and 30 December 2017 period ends respectively.

Action: Companies should consider whether or not they are large companies under the corporation tax quarterly instalment payment regime and, if so, should make arrangements to calculate and pay any instalments due. 

 

Annual tax on enveloped dwellings (ATED) - returns

Deadline for action: 30 April 2018

Issue: 2018/19 and amended 2017/18 ATED returns, and 2018/19 relief declaration returns, are generally due by 30 April. HMRC will provide a pre-return banding check (PBRC) to confirm a property’s valuation band (generally as at 1 April 2017). For relevant high value residential properties, the ATED liability depends on the valuation band the property falls within. A PRBC will be helpful where the property’s value is close to valuation band limits.

Action: Except where a later filing date applies, property owners should submit their ATED returns by 30 April 2018. They can apply for a PRBC where there is ‘reasonable belief’ the property value is within 10 per cent of a banding threshold. Although HMRC will not confirm the specific valuation, PRBCs should be applied for well before submitting the ATED tax return (which is due even if the ATED is fully relieved).

 

Annual tax on enveloped dwellings (ATED) - payment

Deadline for action: 30 April 2018

Issue: Any 2018/19 and additional 2017/18 ATED due must be paid by 30 April 2018, or the return filing date where a later filing date applies. ATED arises on UK residential properties valued above £500,000 (generally as at 1 April 2017) that are owned by UK or non UK non-natural persons, including companies, certain collective investment schemes and certain partnerships.

Action: Owners of affected properties should pay any ATED due by 30 April 2018. The ATED liability depends on the valuation band the property falls within as follows:  

  • £500,001 - £1m - £3,600 (2018/19) £3,500 (2017/18)
  • £1m - £2m - £7,250 (2018/19) £7,050 (2017/18)
  • £2m – £5m - £24,250 (2018/19) £23,550 (2017/18)
  • £5m – £10m - £56,550 (2018/19) £54,950 (2017/18)
  • £5m – £20m - £113,400 (2018/19) £110,100 (2017/18)
  • Over £20m - £226,950 (2018/19) £220,350 (2017/18)

The charge is reduced on a pro-rata basis where, for example, the property is only owned or meets one of the exemptions for part of the period.

 

For more information please get in touch with Melanie Reed, or your usual RSM contact.