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Engagement Letters: Corporation Tax Terms

Corporation Tax: Your Responsibilities

(1) You, as directors, are responsible for the preparation of your corporation tax return(s) and computation(s).

You as directors, on behalf of the company, are legally responsible for:

  • ensuring that the company tax return is correct and complete;
  • ensuring that the information in the return is provided in Extensible Mark-Up (XML) format;
  • filing any returns by the due date; and
  • making payment of tax on time. Failure to do this may lead to automatic penalties and interest.
(2) You are responsible for the preparation of your corporation tax return and computation in electronic format for HM Revenue and Customs.

It is mandatory for the company tax return to be delivered electronically using the Inline Extensible Business Reporting Language (iXBRL) format, a type of computer language. It is your responsibility to ensure that the accounts have been accurately tagged.

(3) You will approve and sign the corporation tax return(s) and computation(s) electronically via our portal.

The signatory to the return cannot delegate this legal responsibility to others. The signatory agrees to check that returns we have prepared for the company are complete before they approve and sign them via our electronic portal.

(4) You will disclose to us all information for the purpose of preparing your corporation tax return(s) and computation(s).

To enable us to carry out our work you agree:

  • that all returns are to be made on the basis of full disclosure of all sources of income, charges, allowances and capital transactions;
  • to provide full information necessary for dealing with the company’s affairs: we will rely on the information and documents being true, correct and complete and will not audit the information or those documents;
  • to authorise us to approach such third parties as may be appropriate for information that we consider necessary to deal with your affairs;
  • to provide us with information in sufficient time for the company tax return to be completed and submitted by its due date. In order that we can do this, we need to receive all relevant information within four months of your financial period end. If for any reason we do not receive all relevant information by this date we may, at our discretion and depending on our work capacity, still endeavour to complete your tax return so that it can be submitted on time. We reserve the right to make an additional charge for such rush work and will advise you of the amount prior to carrying out the work;
  • to provide information on matters affecting the company’s tax liability for the accounting period in respect of which instalments are due at least four weeks before the due date of each instalment. This information should include details of trading profits and other taxable activities up to the date the information is provided, together with estimates to the end of the accounting period; and
  • to provide us with information on advances or loans made to directors, shareholders or their associates during an accounting period and any actual or planned repayments or write offs after the accounting period.
(5) You will keep us informed of changes in the company’s circumstances that could affect its tax liability.

You will keep us informed of changes in the company’s circumstances that could affect its tax liability. If you are unsure whether a change would affect your tax position then we will be happy to advise you

(6) You agree to forward copies of all communications received from HM Revenue and Customs to us.

You agree to forward to us any communications you receive from HM Revenue and Customs in time for us to deal with them as necessary within any time limits. Although HM Revenue and Customs have the authority to deal with us directly, it is still possible for them to contact you without us being aware.

Corporation Tax: Our Responsibilities

(1) We will prepare your taxable profits figure.

Profit from accounts prepared under generally accepted accounting principles may require adjustment to arrive at the profit figure assessed for tax. Where necessary we will prepare the computations for this adjustment from any accounts work we have done, or accounting records we are holding, as well as information and explanations provided by you.

(2) We will prepare your corporation tax return including supplementary pages (where applicable).

We will prepare the company tax return together with any supplementary pages that are required from the information and explanations you provide to us.

(3) We will prepare your corporation tax return in the electronic format required by HM Revenue and Customs.

It is mandatory for the company tax return to be delivered electronically to HM Revenue and Customs using the Inline Extensible Business Reporting Language (iXBRL) format, a type of computer language.

(4) We will submit your corporation tax return(s) and computations(s) to HM Revenue and Customs.

After obtaining the electronic approval (and therefore deemed signature of an appropriately authorised person) we will file the return, computation and accounts online in the iXBRL format.

(5) We will calculate the amount of corporation tax payable to HM Revenue and Customs.

We will calculate any tax the company tax return shows the company to have. We will tell you how much to pay and when. We will advise on the interest and penalty implications if any payments are made late. Where we become aware that tax has been overpaid we will initiate a repayment claim.

We will advise when additional tax is due on loans by the company to directors, shareholders or their associates, and calculate the payments due or the amount repayable when the loans are repaid.

(6) We will advise you of payment dates for corporation tax.

We will inform you if instalment payments of tax are due for an accounting period and the dates they are payable. We will calculate the quarterly instalment amounts based on the information supplied by you and advise you of these amounts.

(7) We will advise you in respect of possible claims and elections.

We will advise you as to possible claims and elections arising from information supplied by you. Where you instruct us to, we will make such claims and elections in the form and manner required by HM Revenue and Customs.

(8) We will provide other taxation advice as and when requested.

We will also provide such other taxation ad hoc advisory services as may be agreed from time to time. These may be the subject of a separate engagement letter. We will discuss and agree our fee for such work when it is commissioned by you. Examples of ad hoc work would include:

  • Dealing with any enquiry opened into the company’s tax return by HM Revenue and Customs; and
  • Preparing any amended returns that may be required and corresponding with HM Revenue and Customs as necessary.

Where specialist advice is required on occasions we may need to seek this from or refer you to appropriate specialists.

(9) We will not advise on aggressive tax schemes.

Since 17 July 2013 a General Anti-Abuse Rule has been in operation in the UK. This rule enables HM Revenue and Customs to further tackle abusive tax planning schemes. Due to the low probability of eventual success of such schemes and the high ethical standards of this firm, it is our policy not to advise on tax schemes that we consider to be artificial or aggressive in nature. Please let us know if you would like to discuss this matter further or if you feel that you are disadvantaged in any way by the firm’s policy on tax avoidance.

(10) We will help and advise on payments made under the deduction of tax.

If applicable, we will complete, using information provided by you, return form CT61 regarding payments made to and by the company under deduction of tax. We will send the CT61 form to you for approval, signature and submission by you to HM Revenue and Customs. We will advise you of the amounts of tax that are due, and the due date for payment and submission of the form. You must inform us immediately if the company pays or receives any interest or similar amounts under deduction of tax.

(11) We will help and advise on personal service companies under IR35.

We will advise, based on information supplied by you, on a contract by contract basis whether the company is subject to the personal services legislation. You authorise us to seek an opinion from HM Revenue and Customs where we consider it appropriate.

Where we consider that contracts are within the personal services legislation we will calculate the deemed salary, prepare the computations using the prescribed method, prepare and submit the necessary payroll reports for any “deemed payments” and advise you how much tax and national insurance to pay and by when. We will also advise whether to pay any actual salary before the year-end and if so how much.

(12) We will help and advise on managed service companies.

We will advise on whether the company is subject to the managed service legislation. You authorise us to seek an opinion from HM Revenue and Customs where we consider it appropriate. If we deem the legislation to apply we will prepare the computations using the prescribed method, prepare and submit the necessary payroll documentation and advise you how much tax and national insurance to pay and by when.

As a firm of accountants, we are not a managed service company provider and are not involved with the company under the terms of the legislation. We will not be made responsible for any unrecovered PAYE debt from the company.

(13) We will provide an additional corporate tax service if you are a group or consortia.

In relation to groups and consortia of which your company is a member, and in respect of which you have instructed us to act; we will provide the following additional services:

  • We will advise on the tax treatment of intra-group payments of dividends, charges and interest;
  • We will advise on the eligibility of companies to make elections in relation to such payments;
  • We will prepare and submit to HM Revenue and Customs elections relating to intra-group payments of dividends, charges and interest;
  • We will deal with all communications relating to elections addressed to us from HM Revenue and Customs;
  • Where instructed, in respect of claims for group and consortium relief:
  • We will advise as required on claims for group and consortium relief and the interaction with other reliefs;
  • We will prepare and submit to HM Revenue and Customs appropriate claims;
  • We will adjust the computations and returns to reflect the surrender and receipt of group and consortium reliefs; and
  • We will advise on arrangements for payment of tax and the surrender and set-off of tax refunds within the group.
These ‘Engagement Letters: Corporation Tax Terms’ were updated in October 2019.

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