29. Corporation Tax
How to account for Corporation Tax and submit a final Company Tax Return (CT600).
Corporation Tax may arise before or after an insolvency procedure.
When a company enters insolvency, the current accounting period ends and a new one begins. After you have been appointed over the insolvent company, Corporation Tax (such as gains or estate interest) will be an expense of the insolvency.
In pre-insolvency, Corporation Tax will form part of HMRC’s claim.
You should:
- update the registered office of the insolvent company to your company address — this is done through Companies House
- get a copy of the company’s Unique Taxpayer Reference (UTR)
- check the Corporation Tax obligations based on the type of insolvency arrangement
- file any Corporation Tax returns that are needed
Before using the online service to ask for a copy of the UTR you should allow at least 10 working days after updating the registered office address.
We will send the UTR to the registered office address listed at Companies House. You should allow at least 15 working days to receive the written copy of the UTR.
If you do not receive the UTR, you should contact HMRC.
Corporation Tax accounting periods differ depending on what kind of insolvency or arrangement the company is in. This may impact how much Corporation Tax the company needs to pay.
29.4.1 If the company is in liquidation
A new accounting period starts on the date of liquidation. Each accounting period will last 12 months until the liquidation ends.
The accounting periods end when the liquidation ends.
29.4.1.1 If the company is in members’ voluntary liquidation (MVL)
Accounting periods run in the same way as other liquidations, but full online Corporation Tax returns need to be submitted.
If statutory accounts are not available, HMRC will accept the most accurate information available.
As MVL companies are solvent, all Corporation Tax that is owed must be paid in full.
29.4.2 If the company is in administration
The current accounting period ends the day before you are appointed.
A new accounting period begins the day you are appointed.
Subsequent accounting periods end when statutory triggers occur (such as ceasing to trade).
29.4.3 If the company is in a company voluntary arrangement
The company has the option to shorten their accounting period to the pre-insolvency period.
If applicable, the accounting period should be changed to end on the day immediately before the meeting of creditors.
The new accounting period begins the day of the meeting of creditors.
You must file the Company Tax Return (CT600) online if the company is in a:
- company voluntary arrangement
- members’ voluntary liquidation
If the insolvent company is in administration or liquidation, you can file the Company Tax Return (CT600) either:
- online
- using the paper form — you must have an exemption for this
Tax on capital gains realised by you is payable as an expense of the insolvency.
HMRC may:
- insist on a full Company Tax Return (CT600) where risk of loss exists
- agree the company’s tax positions using management accounts where appropriate
You may claim relief for terminal losses (final 12 months of trading) against profits of the previous 3 years.
Claims must be made within 2 years of the end of the period in which the losses occurred.
HMRC generally treats the start of liquidation as cessation to trade.
If the company has outstanding enquiries with HMRC, these are not automatically closed when you are appointed as the insolvency practitioner.
You should respond to all HMRC enquiries, and take into consideration the costs involved versus the returns for creditors.
Generally, the distributions you make when you wind up the company are treated and taxed as income. However, distributions may be treated as capital when all the following conditions are met:
- condition A — the individual receiving the distribution had at least a 5% interest in the company immediately before the winding up
- condition B — the company was a close company at any point in the 2 years ending with the start of the winding up
- condition C — the individual receiving the distribution continues to carry on, or be involved with, the same trade or a trade similar to that of the wound-up company at any time within two years from the date of the distribution
- condition D — it is reasonable to assume that the main purpose, or one of the main purposes, of the winding up is the avoidance or reduction of a charge to Income Tax
You can read more about the conditions in section 396B of the Income Tax (Trading and Other Income Act 2005).
You can use strike off routes instead of liquidation.
These distributions are taxed under Corporation Tax Act 2010.
Entering liquidation (including a members’ voluntary liquidation) or administration normally means the:
- group relationship breaks
- company loses beneficial interest of its assets
This occurs from the date that the insolvency procedure starts. From this date, the company cannot claim group relief or surrender losses.
Your appointment removes control from prior owners.
Find out:
- the current Corporation Tax rates
- if you may be able to claim Marginal Relief
Final and penultimate year rules apply where rate changes are proposed.