ESM8270 - Basic principles: how to work out the taxable profits of the intermediary: company example
H Services Ltd makes its accounts up to 30 April each year. In the period ending 30 April 2014, it has income from relevant engagements of £45,000 on which an adjusted taxable profit of £35,000 arises. Under the legislation it is treated as making a deemed payment of £31,000 on which secondary Class 1 NICs liability of £3,222 are paid.
The profits chargeable to corporation tax for the period ending 30 April 2001 become:
| - | Amount | Amount |
|---|---|---|
| Adjusted taxable profit | - | 35000 |
| - | Deduct | - |
| Deemed payment | 31000 | - |
| Secondary Class 1 NICs | 3222 | - |
| Total deductions | 34222 | 34222 |
| Revised taxable profit | - | 778 |
No deduction is made in the company’s accounts or corporation tax computation for the notional 5% allowance made in computing the deemed payment.