IRIS Business Tax - Corporation Tax Computation

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The company's period end is after 01 April 2000 and the profit is under £10,000 (£50,000) why isn't Business Tax charging tax at the starting rate (or giving marginal relief)?

The same rules apply for the staring rate as the small companies' rate.

If the company,

has a short period then the upper and lower limits should be time apportioned.

has associated companies then the upper and lower limits should be divided by the total number of associated companies.

has received franked investment income then when this is added to the basic profit does the total exceed the limits?

Remember that the starting rate does not apply to the first £10,000 with the small company rate being applied to profits above £10,000. Different rates of tax applying to different bands of income is a feature of income tax not corporation tax.
 
From 01 April 2006 the small companies rate was abolished. All profits between £0 - £50,000 from 01 April 2006 until 31 March 2007 will be taxed at 19%. Starting from 01 April 2007the corporation tax rate for financial year 2007  has increased to 20%.

Can Business Tax calculate the tax for a close investment company which should be taxed at the full corporation tax rate?

Yes, to force a company to be taxed at the full tax rate:
Select Data entry followed by Company information.

Change the company type to Close Investment Holding Company.

This should automatically tick the Use full rate of tax field.

The company has two trades so separate computations are required, can Business Tax cope with this?

Business Tax is not able to prepare corporation tax computations for companies carrying on more than one trade.  

Does Business Tax cater for group relief?

Business Tax can cater for group relief for periods where a CT600 is generated but cannot cater for group relief on periods before July 1999 where a CT200 is required.

Claiming group relief

Select Data entry followed by Group and consortium (CT600C) and then select Claims to group relief from the sub menu. This displays the screen where you enter details regarding the amount being claimed.

Business Tax enters the total amount claimed in box 36 on the detailed calculation and on the corporation tax computation.

Surrendering amounts as group relief

The amount to be surrendered is entered on the appropriate losses screen or on the Surrender as group relief screen (updating one also updates the other).

Access the Surrender as group relief screen by selecting Data entry followed by Group and consortium (CT600C) and then select Surrender as group relief from the sub menu.  

Why is Entertainment being added back twice in the corporation tax computation on a client converted to the ELTD chart?

If a client has been converted  from the IRIS chart to the ELTD chart Entertainment may be added back twice in the corporation tax computation.
  
This is because:
The original Business Tax disallowed posting for Entertainment has been converted and is being added back; and

The account is also included in the Global Disallowed Expense category and is being added back again.

To rectify this:
Delete account 321 from the Global Disallowed Expense category at chart level. This will mean that the ELTD chart will work in the same way as the IRIS chart so the user always makes a Business Tax posting for disallowed entertainment;
or
Delete the Business Tax posting for Entertainment once the clients have been converted.

I am getting capital allowances appearing in my non-trading period.

For individual assets set up in Edit | Capital Allowances | A - Maintain Assets, ensure that the date of purchase is the first day of the trading and amend the WDA start date.

If the assets were acquired before the trade commenced then the assets are deemed to be purchased on the first day of trading.

The general pool will need to be recalculated through Edit | Capital Allowances | E - Maintain Pool. Any additions will need to be re-keyed.

How do I suppress a period of non-trading so it only produces one Corporation Tax computation?

Select Edit | Corporation Tax Computation Options and select the option to suppress the non-trading CTAP report.

How do I suppress a Trading loss brought forward from being utilised in my current years profits?

Any Trade loss brought forward must be utilised against the company’s first available Sch DI profits for the same trade (ICTA 1988 s393(1).

The offset can only be suppressed if the DI loss occurred in the period.

How do I suppress the Trading Profit/Loss computation?

Go to Edit | Corporation Tax Computation Options and select the select the 'Suppress Profits from Trade' option.

I am not getting a profit per financial statement figure on my Corporation Tax computation.

This normally occurs if a cessation date has been entered in error. To amend this select Client | View and remove the entry from the ceased field.

There is a warning on the computation regarding NCDs entered in Business Tax not matching those in Accounts Production but some/all of the NCDs were paid after 1 April 2006. How do I stop the warning from displaying?

Select Edit | Non-Corporate Distributions and select the 'suppress warnings' field.

How do I carry back trading losses?

Select Data entry | Calculation | Income and then click on the Trading losses button. Enter the loss in the Carried back field.

The carried back loss can also be shown as brought back in the previous accounting period, using the Brought back field.

Where do I enter the trading loss incurred in the period?

Users are not be required to make an entry within Business Tax to show the trading loss in the period as this is automatically picked up from Accounts Production or through the adjustments made in the Business Tax posting screen.

If you are using Business Tax as a standalone for a Limited company select Edit | Updated Profits to enter a loss.

Where do I enter the tax deducted at source?

Select Data Entry | Calculation | Reliefs and Deductions in Terms of Tax | Calculation of Tax Outstanding or Overpaid tab.

Enter the amount into box 84, Income Tax deducted by gross income.

Where can I enter the number of associated companies?

Go to Data Entry | Calculation | Tax Calculation. Enter the number of associated companies excluding the company that you are working on.