a) A UK resident company had UK trading profits of £5,860,000 and overseas property income (net of 35% withholding tax) of £162,500 in the year to 31 March 2022. Calculate the corporation tax liability for the year and the amount of unrelieved foreign tax.

b) J Ltd has taxable total profits of £950,000 for the year to 31 March 2022 and receives no dividends. The company owns 70% of the ordinary shares of X Ltd and 60% of the ordinary shares of Z Ltd. Z Ltd owns 75% of the ordinary share capital of HRZ Ltd. 

• Determine how many related 51% group companies J Ltd has. 

• Calculate the profit limit which is used for determining whether or not J Ltd must pay corporation tax by installments. 

• Compute the corporation tax liability of J Ltd for the year to 31 March 2022 and state the date (or dates) on which this tax is due to be paid (assuming that the company was “large” for payment by installment purposes in the year to 31 March 2021).

c) M Ltd owns 90% of N Ltd, 65% of O Ltd, and 85% of P Ltd. N Ltd owns 90% of VV Ltd. P Ltd owns 80% of AX Ltd. All companies are UK residents and all of the issued shares are ordinary shares.

Identify 75% of groups within the above structure.

 

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Corporation Tax FY2021 FY2020 FY2019 FY2018 FY2017 Financial Year Main rate ** 19% 19% 19% 19% 19% Patent box (effective rate) 10% 10% 10% 10% 10% R&D SMEs payable credit 14.5% 14.5% 14.5% 14.5% 14.5% R&D expenditure credit 13% 13% 12% 12% 11% The main rate for FY2022 will be 19% The main rate for FY2023 will be 25%. However, a "small profits rate" of 19% will apply to companies with profits not exceeding £50,000. Companies with profits between £50,000 and £250,000 will be subject to the main rate, but reduced by a marginal relief. Corporation Tax FY2021 FY2020 FY2019 FY2018 FY2017 Financial Year Main rate ** 19% 19% 19% 19% 19% Patent box (effective rate) 10% 10% 10% 10% 10% R&D SMEs payable credit 14.5% 14.5% 14.5% 14.5% 14.5% R&D expenditure credit 13% 13% 12% 12% 11% The main rate for FY2022 will be 19% The main rate for FY2023 will be 25%. However, a "small profits rate" of 19% will apply to companies with profits not exceeding £50,000. Companies with profits between £50,000 and £250,000 will be subject to the main rate, but reduced by a marginal relief.

Answer rating: 100% (QA)

Answer a The corporation tax takes into account the ProfitLoss incorporated by the company before ex... View the full answer