Corporation Tax Forms
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Changes of rates and fractions
Time limit for taking up enquiries
CT600 forms - Version 2
We publish all the forms currently in use on these pages and identify them by the letter 'P' in the table linked to this page. The current published forms take account of changes up to and including Finance Act (FA) 2007.
The changes we are working on now are for Budget 2008. To help you prepare your changes, drafts of forms not yet published, identified by the letter 'D', will appear in the table as soon we prepare them. Please note that no substitute forms should be published or brought into use based on drafts. We ask you to wait until we publish the final versions, identified by the letter 'P' in the table below, before seeking substitute approval and publishing your version. We plan to publish the final versions this year by 31 August 2008.
Overview of changes for 2008
A CT600 Budget Insert (April 2008) is being issued to companies with every notice to deliver a return, and with every request for paper forms from our Orderline. The Insert outlines the changes that affect forms CT600 and details the effective dates for claims under new provisions as well as telling you when our computer systems will be updated. The Budget 2008 pages of our website gives you access to details of all the announcements made.
CT600 Budget Insert (April 2008) (PDF 81K)
For 2008 there are six new boxes on the 8-page company tax return form CT600 to cater for new capital allowances rules and three on the 4-page CT600 (Short).
Updated advice in the CT600 Guide (2008) will cover these new boxes and capital allowances changes. There will also be updated items for Research & Development including vaccines research.
We are adding financial year (FY) 2008 to the table of rates and fractions in the CT600 Guide and removed some of the detailed advice about tax calculation using rates that applied only up to 31 March 2006. This material will be added to an article on tax calculation and made available on the corporation tax pages of the HMRC website.
If there are to be any further changes to the forms in the CT600 series we will tell you about the changes here. At present we are reviewing the wording of form CT600J (Disclosure of tax avoidance schemes) in line with the proposals contained in Clause 111 and Schedule 38 of the Finance Bill and will let you know, on this page, before the end of June 2008 whether or not there are going to be any changes.
All the CT600 Supplementary Pages published in 2006 remain valid for use at present.
Details of changes for 2008
Changes of rates and fractions
The changes to the small companies' rates and the fractions used in calculating marginal small companies' relief (MSCR) for FY 2008 affect many companies.
For most companies (all except those that have ring fence profits) the calculation behind a claim is straightforward. The legislation in Section 13 ICTA 1988 applies to claims for small companies’ rates or MSCR. Companies with accounting periods (AP) straddling 1 April 2008 need to apportion profits between financial years (FY) so they can apply the different rates for claims to charge tax at small companies' rate. For claims to and the calculation of MSCR for such straddling periods they also need to apportion profits to arrive at MSCR by taking account of the different fractions for each FY.
For FY 2008 which began on 1 April 2008 small companies' rate (non-ring fence profits) is 21%, and the relevant MSCR fraction is now 7/400 (the standard fraction).
For companies with ring fence profits (broadly income and gains from oil extraction or oil rights in the UK or UK Continental Shelf) the separate ring fence small companies' rate and fraction are the same as for FY 2007 at 19% and 11/400.
If a company’s profits consist of both ring fence and other profits and it claims either small companies’ rates or MSCR it must make separate calculations for ring fence and any remaining profits. For instance if the company makes a claim under Section 13(2) of ICTA 1988 for MSCR for an AP ending on or after 1 April 2007 the corporation tax charged on profits is reduced by a figure equal to the ring fence fraction of the ring fence amount and a figure equal to the standard fraction of the remaining amount. The formulas are shown below for convenience.
The 'ring fence amount' is found by taking MR – PR x IR/PR where:
MR is the sum equal to the 'appropriate fraction' of the upper relevant maximum
amount,
PR is so much of the profits for the AP as consist of ring fence profits and
IR is so much of the basic profits for the period as consist of ring fence
profits.
The 'appropriate fraction' in the context of 'ring fence amount' is the fraction of the profits for the AP that consists of ring fence profits.
The 'remaining amount' is found by taking MNR – PNR x INR/PNR where:
MNR is the sum equal to the 'appropriate fraction' of the upper relevant maximum
amount,
PNR is so much of the profits for the AP as do not consist of ring fence profits,
and
INR is so much of the basic profits for that AP as do not consist of ring fence
profits
The 'appropriate fraction' in the context of the 'remaining amount' is the fraction of the profits for the AP that does not consist of ring fence profits.
Capital allowances
After Royal Assent has been given the changes announced at Budget 2008 will operate for expenditure incurred after 31 March 2008. The changes are all listed on the CT600 Budget Insert and there are further details on the Budget 2008 pages of our website.
Some of these items affect forms CT600:
- Replacement of the 40% or 50% first-year allowances for small and medium-sized businesses by an annual investment allowance (AIA) of 100% for the first £50,000 of expenditure on plant and machinery (excluding cars) in the main pool means we need to add two boxes. These new whole £ boxes are numbered 172 and 173 and are at the head of the capital allowances columns for both trade and non-trade allowances on page 6 of the 8-page form and page 3 of the 4-page form. The description for both is ‘Annual investment allowance’.
- The reduction of writing-down allowances (WDAs) for plant and machinery in the main pool from 25% to 20% means we need to change the description of boxes 107 and 108 on both forms to read ‘Machinery and plant – main pool’.
- The increase of WDAs on long-life assets and the inclusion of certain thermal insulation and fixtures integral to buildings in the special rate pool with WDAs at 10% means we need to change the descriptions of boxes 105 and 106 to read ‘Machinery and plant – special rate pool’
- Because of changing requirements for capital allowances on ‘expensive’ cars outside any expenditure included in the main pool or on low carbon emission vehicles on which first year allowances can be claimed, and with further changes yet to be made, we are changing the description for boxes 109 and 110 to read ‘Cars’ and amending notes in the Guide as necessary to refer to our website to keep pace with the changes.
- We are also changing the heading ‘Expenditure’ which appears
both on page 6 of the 8-page form and on page 3 of the 4-page form so it
now reads ‘Qualifying expenditure’. Under that heading the description
for box 118 stays the same but all the others change, one disappears and
a new one is added. Box 119 is removed and replaced by a new whole £
box 174 with the description ‘Designated environmentally friendly
machinery and plant’
The description of existing box 120 becomes ‘Machinery and plant on long-life assets and integral features’.The description of box 121 becomes ‘Other machinery and plant’. - The introduction of a payable tax credit for losses resulting from qualifying
expenditure on designated energy-saving, or environmentally beneficial,
plant or machinery creates a need for three further new £ and p boxes.
These are only on the 8-page form.
The first two are on page 5 under the ‘Tax reconciliation’ heading. The first is numbered 170 and appears after existing box 88 and before existing box 89, and has the description ‘Capital allowances first-year tax credit’. The second is numbered 171 and appears immediately after existing box 90 and before existing box 91, and has the description ‘Capital allowances first-year tax credit payable’.The introduction of these two new boxes causes changes to the rubric over existing boxes 92 and 93 as well as new rules for box 171.
Box 92 is now the figure in box 86 less the total of boxes 87, 88, 170 and 91.
Box 93 is now the total of boxes 87, 88, 170 and 91 less the figure in box 86.
New box 171 is the total of boxes 87, 88 and 1270 minus the total of boxes 86, 89 and 90.
The final new £ and p box is on page 7 of the 8-page form under the ‘Repayments for the period covered by this return’ heading immediately after existing box 144. Unlike all the other new boxes this one does not have solid filling surrounding the number attached to the box but is like box 144. The description for this new box is ‘Payable capital allowances first-year tax credit’.
Time limit for taking up enquiries
This change was announced last year but is mentioned here as it now affects most returns made for APs ending after 31 March 2008.
For such returns the rules in Paragraph 24 of Schedule 18 FA 1998 govern the time limit within which HMRC can open an enquiry into a company tax return. Paragraph 24(2) has been re-written and new sub-paragraphs 6 and 7 added.
For most companies this means that for a return for an AP ending after 31 March 2008 delivered before or on the filing date HMRC have 12 months from the day on which the return was delivered in which to open any such enquiry. This gives earlier certainty for most companies.
For returns delivered before or on the filing date there is one exception to this rule and that concerns companies that are members of groups that are not small groups. For them the 12 month time limit starts not from the day on which the return was delivered but from the filing date. In this context the words 'group' and 'small group' have the same meaning as in Sections 383(2) and 474(1) of the Companies Act 2006. 'Group' means a parent company and its subsidiary undertakings.
Sections 383 and 384 (PDF 20K)
Substitute Tax Returns
Accurate facsimiles of the official company tax return forms (based on the final paper format) can be accepted in accordance with Statement of Practice SP5/87. The design of substitute returns and supplementary pages must be centrally approved by HM Revenue & Customs before they are marketed or brought into use.
Quark versions of the return forms
Important
Draft versions have no legal status and are not in a prescribed form. They
must not be used by companies to deliver their company tax returns.
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