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CT1 Pay and File

CORPORATION TAX – Payment and Filing

January 10, 2017 By accountsadvice No comments yet Capital Gains Tax, Corporate Taxes, Corporation Tax, Corporation Tax Capital Allowances, CT1 Pay and File, CT1 Returns, Uncategorized

 

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The Irish corporation tax system operates on a self-assessment basis.  Therefore, it is solely the responsibility of the company to calculate and pay its corporation tax liability within deadline.  Any company liable to corporation tax must submit a CT1 Form.  This is a Tax Return containing details of profits, chargeable gains and other relevant information.  This is outlined in Section 884 TCA 1997.

 

 

When must the CT1  Return be filed?
(a) It must be filed within nine months of the end of the company’s accounting period but
(b) no later than the 23rd day of the month
(c) if the Tax Return along with payment of the associated tax liability is filed via the Revenue Online Service.
(d) Otherwise, the Return must be filed within eight months and twenty one days of the company’s year-end.

 

 

For Example:
A company with a 31st December 2016 year-end must file its CT1 form on or before 21st September 2017.  This is unless it files its Return and the relevant tax payment using the Revenue Online Service.  In that case the deadline date is extended to 23rd September 2017.

 

 

Can an Accounting period be longer than 12 months?
An accounting period for CT purposes cannot be longer than twelve months.

 

 

What happens if a company has two accounting periods?
If a company has an accounting period of say, 15 months for example, then it is deemed to have:
(a)   Two accounting periods for Corporation Tax purposes and
(b)   Two Preliminary Tax payment dates.

 

 

How would that work?
(a) The first accounting period would be for the first twelve months.
(b) The second accounting period would be for the remaining three months.

 

 

 

Consequences of filing a late or incomplete/incorrect CT Return

 

The following surcharges will apply:

 

(i) If the Corporation Tax Return is filed less than two months late, a 5% surcharge (subject to maximum of €12,695) will be calculated on the company’s CT liability for the accounting period in question.  This surcharge will apply irrespective of whether the tax had been paid within deadline because this surcharge arises in relation to the late filing of the CT1 Form.

 

(ii) If filed more than two months late, a 10% surcharge (subject to maximum of €63,485) will be levied on the company’s tax liability for the period in question regardless of whether or not the tax had been paid on time.

 

Please be aware that the surcharge also includes any Income Tax due.

 

 

Is there anything else to keep in mind?
In addition to the above surcharges, in circumstances where a company does not submit its return on time, the following restrictions on the use of certain allowances and reliefs will also apply:

 

(i) If filed less than two months late, the reliefs and allowances will be restricted by 25%.  This is subject to a maximum of €31,740 in each case,

 

(ii) If filed later than 2 months, the reliefs and allowances are restricted by 50%.  This subject to a maximum of €158,715 in each case.

 

 

 

What about Group Relief?
For Group Relief to apply, both the surrendering and the claimant company must have submitted their Corporation Tax Returns within the deadline date.

 

 

 

Interaction with Local Property Tax 
A surcharge of 10% will be levied on the final liability where the CT1 Return has been filed on time but where the LPT Return or payment is outstanding at the CT filing date.  This surcharge will also be levied if an agreed payment arrangement for LPT has not been set up.  Finally, if the company subsequently pays its LPT liability in full, bringing its tax affairs up to date, the amount of the surcharge will be capped at the amount of the LPT liability involved.

 

 

 

 Preliminary Tax

 

In Ireland, companies are required to prepay a portion of their corporation tax liability. This is known as “Preliminary Tax”.  The rules for calculating Preliminary Tax depends on whether a company is considered to be a “small company” or a “non-small company”.

 

 

What’s a “small company”?

 

For preliminary tax purposes it’s a company whose corporation tax liability for the previous twelve month accounting period did not exceed €200,000.

 

 

 

How is it’s Preliminary Corporation Tax calculated?

 

A company which qualifies as a “small company” has the option of computing its preliminary CT payment on the lower of:

 

(a) 90% of the total estimated corporation tax liability for the current period, or

 

(b) 100% of the final corporation tax liability for the previous period.

 

 

 

When can a “small company” pay it’s Preliminary Tax?

 

It has the option of paying its Preliminary Tax one month before the end of its accounting period.  This is provided it’s on a date no later than the 23rd day of the month.

 

 

 

What about the balance of outstanding tax?

 

It must be paid on or before the company’s tax return filing date.  In other words, on the 23rd day of the ninth month following the end of the accounting period.

 

 

Example:

 

If the accounting period ended on 31st December 2016, the balance of the tax would be payable by 23rd September 2017.  This is provided the Return and payment were made via ROS.  Otherwise, it would be on or before 21st September 2017.

 

 

 

Which is the most advisable option to choose?

 

It is advisable to choose the second option.   By paying 100% of the previous year’s CT liability, this ensures that no underpayment will have been made by the Company thereby avoiding exposure to interest penalties.

 

 

 

What happens if sufficient Preliminary CT isn’t paid or is not paid on time?

 

Please be aware that if the company doesn’t pay sufficient preliminary corporation tax or if the preliminary tax is not paid on time, an interest charge will be levied.   A daily simple interest rate of 0.0219% will arise on the difference between:
(a) 100% of the final CT liability and
(b) The amounts paid over to the Irish Revenue Authorities.

 

 

 

 

What about companies not deemed to be “small Companies”?

 

For companies which are not deemed to be “small companies” the following rules will apply:

 

The first preliminary tax payment or “Initial Instalment” falls due no later than the 23rd day of the sixth month from the commencement of the chargeable period. The payment due is the lower of:

 

(a)   50% of the previous periods corporation tax liability or
(b)   45% of the current year’s liability.

 

 

The second preliminary tax payment or “Final Instalment” falls due no later than the 23rd of the month preceding the end of the chargeable period (i.e. by the 23rd day of the eleventh month of the accounting period). This payment must bring the total preliminary tax payment submitted to the Revenue Authorities to at least 90% of the total tax payable for the current chargeable period including the tax on any chargeable gains.

 

 

The company must file its CT1 Return and pay the balance of the Corporation Tax (i.e. the remaining 10%) no later than the 23rd day of the ninth month after the chargeable period ends.

 

 

 

 

If you are a Business Owner looking to incorporate or a Director/Shareholder seeking comprehensive tax advice or looking to regularise your tax affairs, and wish to deal with a Corporate Taxes Specialist please contact us at queries@accountsadvicecentre.ie

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.

 

Revenue eBriefs since 1st January 2016

May 18, 2016 By accountsadvice No comments yet Business Tax, Business Taxes, Capital Acquisitions Tax, Capital Allowances Ireland, Capital Gains Tax, Corporate Taxes, Corporation Tax, Cross border Taxes, CT1 Pay and File, CT1 Returns, Gift Tax Ireland, Income Tax, Income Tax Return Deadline, Income Tax Returns, Inheritance Tax, Landlord's rental property tax, Local Property Tax, PAYE, Payroll Taxes, Property Taxes Ireland, Qualifying Disclosure, Research and Development, Revenue Compliance Interventions, Stamp Duty, Tax News

Best Tax Advisors for full range of Irish taxes under all tax heads

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Are you aware of how many changes to our tax system have been implemented between 1st January 2016 and today?

 

The Irish tax system is constantly evolving.  The Revenue Commissioners are consistently revising their tax guidance material under all tax heads including Income Tax, CGT, CAT, VAT, PAYE/PRSI/USC, Corporation Tax, Stamp Duty, PSWT, etc.

 

 

 

 

 

 

 

 

  • eBrief No. 47/2016: Revised tax treatment of royalty income, with effect from 1 January 2016, under the terms of the Ireland-Estonia Double Taxation Convention 1997

 

 

 

 

  • eBrief No. 43/2016: Clarification of circumstances where a CGT clearance certificate is not required

 

  • eBrief No. 42/2016: VAT – “Cancellation of a registration number – special provisions for notification and publication” (section 108D)

 

  • eBrief No. 41/2016: Termination of carry forward of certain unused capital allowances beyond 2014

 

 

  • eBrief No. 39/2016: Disclosure by Revenue of taxpayer information – Finance Act 2015 changes

 

 

 

 

 

 

  • eBrief No. 33/2016: Increased compliance interventions in the construction sector – application of the Reverse Charge for VAT and other matters

 

 

 

 

 

  • eBrief No. 28/2016: Credit in respect of tax deducted from emoluments of certain directors and employees – Section 997A TCA 1997

 

 

  • eBrief No. 26/2016: Taxation Treatment of Termination Payments on Retirement or Removal from Office or Employment

 

 

 

 

  • eBrief No. 22/2016: Return by employer of employees who availed of relief under the Special Assignee Relief Programme (SARP)

 

 

 

 

 

 

 

 

 

 

 

 

 

  • eBrief No. 09/2016: Exemption in respect of certain expenses of State Examinations Commission examiners

 

 

  • eBrief No. 07/2016: ROS Digital Certificate renewals 2016 – reminder to save your new Certificate

 

 

 

 

 

  • eBrief No. 02/2016: eRCT payments to subcontractors for 12-month period 1 January 2015 to 31 December 2015

 

 

 

 

If you are looking for a qualified Chartered Tax Advisor to help you navigate through the complexities of the Irish tax system, please contact us at queries@accountsadvicecentre.ie

 

 

 

 

Please be aware that the information contained in this article is of a general nature.  It is not intended to address specific circumstances in relation to any individual or entity. All reasonable efforts have been made by Accounts Advice Centre to provide accurate and up-to-date information, however, there can be no guarantee that such information is accurate on the date it is received or that it will continue to remain so. This information should not be acted upon without full and comprehensive, specialist professional tax advice.