What is a company tax return?
A company tax return, also known as the CT600 form, is filed by companies or associations to report their spending, profits and corporation tax figures to HMRC.
You'll need to file a company tax return once a year, but - unlike with self-assessment tax returns - there isn't a universal deadline. Instead, the due date for your return will depend on your company's accounting period.
- Find out more: What is corporation tax?
Who needs to file a company tax return?
Company tax returns must be sent by those who run limited companies. To do this, you'll first have to register for corporation tax.
If you're a sole trader or in a partnership, you'll need to send a self-assessment tax return instead.
When you first set up a limited company, you'll register Companies House. At this point, most companies will also register for corporation tax and PAYE as an employer. However, if you register your company by post, using an agent or using third-party software, you'll need to register for corporation tax separately.
You must register within three months of starting to do business, which includes buying, selling, advertising and even just renting a business premises or employing someone.
If HMRC thinks your company is likely to owe corporation tax, it will send a 'notice to deliver a company tax return'. After you receive this notice, you must send a company tax return - even if you make a loss or don't owe anything.
If you don't receive this notice but know you owe tax, you should contact HMRC, or risk being prosecuted for 'undeclared tax'.
How to file a company tax return
Most people will have to file their company tax return online. Before you start, you'll need:
- your company's taxable profit - this is the total company income minus any tax allowances and business expenses
- your government gateway user ID and password. If you're making your first company tax return, you can create a user ID when you first use the service
- your Companies House password and authentication code (if you're filing your accounts at the same time).
You can only use the paper CT600 form if you want to file your return in Welsh or you're unable to file online. HMRC has published a list of reasonable excuses as to why this might be the case.
Along with the CT600 form, you must also fill in and post a WT1 form to explain why you've used the paper form.
- Find out more: Small business tax: what you need to pay
For more help on how to fill out a CT600 form, HMRC has an extensive guide.
CT600 form: what you need to fill in
The paper CT600 form is 11 pages long and has many fields to fill out - but the good news is, you probably won't have to fill out all of them. As the questions cover every type of business, not all will apply to yours.
Here, we give a brief overview of the questions you'll definitely need to answer:
- Company information (boxes 1-4): basic company details
- About this return (boxes 30-35): state the accounting period the return relates to
- About this return (boxes 80-85): tick the box to say whether the accounts are for the period you've stated, or a different period
- Tax calculation (boxes 145-150): state your company's turnover - if you don't have a turnover, put an 'x' in the box for 150.
- Income (boxes 155-205): enter the figures for all income received by your business
- Chargeable gains (boxes 210-220): specify your chargeable gains and allowable losses
- Profits before deductions and reliefs (boxes 225-235): this is the amount on which corporation tax is chargeable - but you can also specify certain losses
- Deductions and reliefs (boxes 240-325): detail any trading losses, capital allowances, expenses and reliefs
- Tax calculation (boxes 330-440): this is where you need to calculate the corporation tax due.
There are several other sections where you may need to detail things like capital gains income, overseas expenditure and business premises renovation, but these are unlikely to be staples of most company tax returns.
The calculations you're expected to do can be pretty complex, and many people prefer to employ an accountant to fill out their company tax return on their behalf. Even if you do this, however, as the company owner you will still be responsible if any of the details provided to HMRC are incorrect.
When to file a company tax return
12 months after the end of the accounting period
You need to submit your company tax return within 12 months of the end of the accounting period it covers.
The accounting period is normally the same as your company's financial year.
This could be slightly different in your first year of operations, however, as your accounting period may cover more than 12 months.
- Companies House will set a day for the end of your company's financial year - this is usually the last day of the month your company was set up.
- Your first accounts will run from the day your company was set up to the following year's financial year end.
- As this accounting period usually covers more than 12 months, you may need to file two returns.
In future years, your accounts will run from the start of the financial year through to its end, so only one tax return will be required.
To complicate things further, however, the deadline to pay your corporation tax bill is usually nine months and one day after the end of the same accounting period, so you'll need to calculate your corporation tax three months before your tax return is due.
You set up your new company on 11 June 2018. Companies House sets your end of financial year as 30 June 2019.
Your accounting period runs from 11 June 2018 through to 30 June 2019 - a year and three weeks.
You'll have to file two returns in your first year: one to cover the first three weeks, and one to cover the next twelve months. You'll also have two payment deadlines.
The following year, you'll only need to file one tax return, covering 1 July 2019 to 30 June 2020.
Fines if you file a company tax return late
If you miss the deadline to file your company tax return, HMRC may charge you a fine. The charges work as follows:
- One day late: £100 penalty
- Three months late: Another £100 penalty
- Six months late: An additional penalty of 10% of your estimated corporation tax bill. HMRC makes this estimate, and you are unable to appeal against it.
- 12 months late: Another 10% penalty of your estimated corporation tax bill.
If your tax return is filed late three times in a row, the £100 penalties will be increased to £500 each.
There are separate fines charged if you're late paying your corporation tax bill.
Making an appeal against a late fine
If you have a 'reasonable excuse' for filing your company tax return after the deadline, you can appeal against a late filing penalty.
Acceptable reasonable excuses can include:
- the death of a partner or close relative shortly before the tax return or payment deadline
- an unexpected hospital stay that prevented you from dealing with tax affairs
- a serious or life-threatening illness
- computer or software failed just before or while you were preparing your tax return (there's a specific form if you filed late because of computer problems)
- there were services issues with HMRC's online services
- a fire, flood or theft prevented you from completing your tax return
The appeals process
When HMRC sends you a penalty letter, you can use the appeal form that comes with it, or follow the appeal instructions in the letter.
You normally have 30 days to appeal, and will need to include your name or your business name, your tax reference number, what you disagree with and why, what you think the correct figures are and how you've calculated them, and your signature.
You should also tell HMRC if you have any extra information that helps support your case, or if you think they've missed information you've provided.
A review will be carried out by someone in HMRC who was not involved in the original decision. The process usually takes 45 days - HMRC should let you know if it's likely to take longer.
If you disagree with the review
What if you make a mistake on your return?
Providing the wrong information on a company tax return could land you with a fine.
That said, HMRC will be more lenient, or waive the fine altogether, if the mistake was careless rather than deliberate, and if you bring it to their attention.
If HMRC decides:
- The mistakes are careless: you could be charged 0-30% of your tax bill if you own up, or 15-30% if HMRC spots it.
- The mistakes are deliberate but not concealed: you could face a fine of 20-70% if you alert HMRC to it, or 35-70% if HMRC discovers it.
- The mistakes are deliberate and concealed: you might be charged 30-100% fines if you own up, or 50-100% if you don't.
Should you find a mistake on your tax return, you can usually amend your tax return for up to 12 months after filing.