Corporation tax 2021/22

Preface
Table of examples
Table of statutes
Table of statutory instruments and other guidance
Table of European legislation
Table of cases
List of abbreviations
Chapter 1 Introduction to corporation tax
	Signposts
	Corporation tax legislation
	Company law aspects
	The fundamentals of corporation tax
	Company accounts and directors’ duties
	Taxation and accounts
Chapter 2 Trading income
	Signposts
	Introduction
	Trading profits
	Trade
	Self-assessment of trading income
	Net profits from non-trading activities
	Expenses with a restricted deduction
	Expenses with a permitted deduction
	Expenditure in connection with employees
	Expenses of a specific trade
	Deductible and non-deductible expenses
	Receipts not taxable as trading income
	Receipts taxable as trading income
	Property income treated as trading income
	Redress payments for mis-selling
	Activities treated as a trade by statute
	Barter trading
	Appropriations of profit
	Valuation of stocks and work in progress
	Change in basis of accounting
	Post-cessation receipts
	Illustrative computational example
	Bodies granted exemption from corporation tax on trading income
	Charitable donations relief
	Charitable receipts
	Mutual companies
	Members’ clubs
	Community amateur sports clubs (CASCs)
	Relief for expenditure on grassroots sport
Chapter 3 Capital allowances (plant and machinery)
	Signposts
	Tangible fixed assets
	Plant and machinery allowances
	Rates of capital allowances
	What qualifies as plant or machinery
	Annual investment allowance
	First year allowance
	Expenditure on which an FYA may not be claimed
	Allocation of expenditure between the AIA, FYAs and other capital allowances
	Fixtures
	Computation of capital allowances
	Special rate expenditure and the special rate pool
	Contribution allowances
	Leasing
	Anti-avoidance
Chapter 4 Single company trading losses
	Signposts
	Trading profits and losses
	Carry-forward of trading loss
	Set trading loss against total profits
	Relief for qualifying charitable donations
	Terminal loss relief
	Loss relief restrictions
	Self-assessment
	Entitlement to first-year tax credits
Chapter 5 Groups
	Signposts
	Business structures
	Accounting and tax treatment of groups
	Group relief
	Group relief claims
	Availability of group relief
	Group relief compliance
	Corporate interest restriction
	Digital services tax
	Anti-avoidance: transfers of corporate profits
Chapter 6 Investment business
	Signposts
	Introduction
	Investment income
	Management expenses
	Investments in shares or loan stock
	Community investment tax relief (CITR)
Chapter 7 Property investment
	Signposts
	Introduction
	Trading or investing?
	Profits of a property business
	Property losses
	The lease premium rules
	Reverse premiums
	Annual tax on enveloped dwellings (ATED)
	Non-UK residents’ gains on UK property
	Specialist investment companies: real estate investment trusts
Chapter 8 Buildings and structures
	Signposts
	Introduction
	Structures and buildings allowances
	Buildings and structures
	Allowances only available if the business owns the relevant interest in the property
	Who qualifies for the allowance and how much is it?
	What is qualifying expenditure?
	Qualifying activities
	When does the allowance begin and when does it come to  an end?
	VAT
	Evidentiary requirements
	Anti-avoidance
	The business premises renovation allowance
Chapter 9 The Construction Industry Scheme
	Signposts
	Introduction
	Employment status
	Construction contract
	Tax deductions from contract payments to sub-contractors
	Registration for gross payment
	Verification, record-keeping and penalties
	Record-keeping
	Monthly return procedures
	Cancellation of registration for gross payment
	Application of sums deducted from contract payments
	CIS penalties on contractors
	Security deposit legislation
Chapter 10 Close companies and connected issues
	Signposts
	Introduction
	Close companies
	Connected persons
	Close investment-holding companies
	Companies owned by spouses or civil partners
Chapter 11 Loan relationships
	Signposts
	Company finance
	Accounting treatment
	Close companies
	Trading and non-trading loan relationships
	Trading loan relationships
	Loan relationships with an unallowable purpose
	Non-trading loan relationships
	Relief for non-trading deficits
	Pre loan relationship and pre-trading expenditure
	Costs of obtaining loan finance
	Connected companies relationships
	Consequences of connection
	Groups and consortia
	Foreign exchange gains and losses
	Anti-avoidance legislation
	Company tax return
Chapter 12 Intangible fixed assets
	Signposts
	Scope pre- and post-FA 2002
	Meaning of an intangible asset
	Corporation tax treatment
	Prescribed debit and credit adjustments
	Sale of a chargeable intangible asset
	Groups
	Other aspects
	International aspects
Chapter 13 UK Patent Box
	Signposts
	Introduction
	Scope and nature of the Patent Box
	Qualifying company
	Qualifying IP rights
	Relevant IP profits or losses of a trade
	Alternative ‘streaming’ approach
	Patent Box from 1 July 2016
	Treatment of relevant IP losses of a trade
	Making or revoking a Patent Box election
	Anti-avoidance provisions
	Transferring trades
Chapter 14 Research and development
	Signposts
	Introduction
	R&D capital expenditure
	R&D revenue expenditure
	Rules specific to SMEs
	Rules specific to large companies
	‘Above-the-line’ expenditure credit for large companies
	Restrictions on R&D and other reliefs
	Tax relief for expenditure on vaccine research
	Claiming R&D reliefs
	Remediation of contaminated or derelict land
Chapter 15 Creative sector tax reliefs
	Signposts
	Introduction to the reliefs
	Film tax relief
	Television tax relief
	Video games tax relief
	Theatre tax relief
	Orchestra tax relief
	Museums and galleries exhibitions tax relief
	Special rules for losses
Chapter 16 Chargeable gains
	Signposts
	Introduction
	Basic chargeable gains computation
	Roll-over relief on replacement of business assets
	Gifts to charities, etc
	Gifts of pre-eminent objects to the nation
	Substantial shareholdings exemption (SSE)
	Substantial shareholdings exemption for qualifying institutional investors
	Intra-group asset transfer
	Special computational provisions
	Anti-avoidance
	Losses attributable to depreciatory transactions
	Restrictions on allowable capital losses
	Attribution of gains to members of non-resident companies
Chapter 17 Buying and selling companies
	Signposts
	Buying and selling a corporate business
	Company reconstructions and amalgamations
	Trading losses
	Capital allowances
	Restrictions on transfer of deductions
	UK Patent Box
	European mergers and reconstructions
	Transactions in securities
	Clearance procedures
Chapter 18 Distributions
	Signposts
	Introduction
	Payments classed as distributions
	Qualifying and non-qualifying distributions (now distributions to which CTA 2010, s 1100 applies and other distributions)
	Small company dividend payments
	Payments not treated as distributions
	Demergers
	Purchase by a company of its own shares
	Striking off a defunct company
	Surplus ACT
	Dividends received by companies
	Exemption of distributions received
	Relief for underlying foreign tax on dividends
Chapter 19 Liquidations
	Signposts
	Insolvency
	Administration proceedings
	Liquidation proceedings
	Dissolution by striking off
	Disincorporation relief
	Tax avoidance, evasion and phoenixism
Chapter 20 Foreign matters
	Signposts
	Introduction
	Company residence
	UK resident company with overseas income
	Non-UK resident company carrying on a trade in the UK
	Non-resident company: UK trading income
	Non-resident company: UK non-trading income
	International movement of capital
	UK company becoming non-UK resident
	Double tax relief
	Controlled foreign companies
	Foreign branch exemption
	Foreign currency accounting
	Diverted profits tax
	Profit fragmentation
Chapter 21 Transfer pricing
	Signposts
	Introduction
	Base erosion and profit shifting
	The UK transfer pricing rules
	Pre-existing dormant companies
	Small and medium-sized enterprises
	Miscellaneous rules relating to transfer pricing
	Self-assessment
	Country-by-country reporting
	Advance pricing agreements
	Advance thin capitalisation agreements
	Tax arbitrage
	Hybrid and other tax mismatches
	Mutual agreement procedure and arbitration
Chapter 22 Self-assessment
	Signposts
	Introduction
	Company tax return
	Contacting HMRC
	Duty to keep and preserve records
	Accounting periods
	Form CT600
	Filing date
	Online filing
	Routine enquiry into company tax returns
	Investigation of tax fraud
	Appeals procedures
	Company appeal
	Alternative dispute resolution
	HMRC’s litigation and settlement strategy
Chapter 23 Rates and payment of corporation tax
	Signposts
	Rates of corporation tax
	How to pay corporation tax
	Payment dates
	Large companies: quarterly instalments
	Late payment interest on corporation tax
	Group payment arrangements
	Quarterly accounting for income tax
	Penalties for failing to pay tax on time
	Accelerated payments of tax
	Claims for overpaid corporation tax
	Difficulties in paying corporation tax
	Security deposit legislation
Chapter 24 Self-assessment penalties
	Signposts
	Introduction
	Penalties for incorrect tax returns
	Company failure to notify taxable activities
	Failure to deliver a return by the filing date
	Penalties for failing to pay tax on time
	Penalty procedures generally
	Publishing details of deliberate tax defaulters
	Managing serious defaulters
	Tax agents: dishonest conduct
Chapter 25 HMRC powers
	Signposts
	Introduction to HMRC powers
	Information and inspection powers
	Record-keeping
	HMRC time limits for raising assessments
	HMRC correction of tax returns
	Tax debtors
	Duties of senior accounting officers
	Disclosure of tax avoidance schemes (DOTAS)
	General anti-abuse rule (GAAR)
	Public sector procurement restrictions
	HMRC action to counter tax avoidance schemes
	Multilateral co-operation
Chapter 26 Accounting and tax
	Signposts
	Accounting standards
	UK GAAP
	Current UK GAAP
	FRS 102
	FRS 101
	Accounting for tax under UK GAAP
	International GAAP
	Interaction of accounting and tax principles
	Amendments to FRS 102 and FRS 105: rent concessions
Chapter 27 The year end
	Signposts
	Corporation tax computation
	Tax planning
Appendix 1: Retail prices index from March 1982 onwards
Index