Where a company makes a profit or has taxable income, corporation tax is levied on those amounts and becomes payable to Revenue and Customs.
The amount of tax payable will largely depend on how much profit is earned and the availability of any reliefs and allowances which the individual company may be entitled to.
Newly registered Companies and Self Assessment
All newly registered companies must inform the taxation authorities of their existence within twelve months from the end of their accounting reference date.
It is not the obligation of Revenue and Customs to inform the new business that it should either prepare the necessary returns or make any payment due at the correct time.
The onus is on the company to ensure that adequate systems are in place and that it fulfils it requirements as and when they fall due.
The placing of the responsibility on to the company is what is known as self assessment and means that businesses can not avoid paying tax just because the tax authorities have not requested it.
In most situations, when a business is registered at Companies House, Revenue and Customs will access the required information and use this as a basis to contact the company at its registered office address by sending it a Form CT41G.
Operating a Corporation Tax System
Accounting for a company’s corporation tax liability will likely be part of a wider system which houses other regulatory obligations which the business has.
Examples of such could be VAT, payroll and the requirements for the company to produce statutory accounts.
The above requirements would likely already be a catalyst for the company maintaining suitable accounting records so that amounts included in any corporation tax calculation could be described and verified.
The actual calculation of the tax might require additional computer software, skilled personnel or the retention of the services of an accountant, depending on how the company wishes to address the task.