For more information, look at the Office of Government Commerce at-, www.ogc.gov.uk/ and the Centre for Effective Dispute Resolution at: www.cedr.co.uk/.

Professional English in Use Lo*

Corporation Tax

Corporation Tax liability in the UK

Corporation Tax is the tax payable on a company's Income (for example from investment in shares) or gains (for example from the sale of assets) at the statutory rate. In this context 'company' is used to refer to the following, in addition to the more conventional meaning of the word:

■ Members' clubs, societies and associations who might have trading activities or income from non-members, for example amateur sports clubs

■ Trade associations, for example the Association of British Travel Agents (ABTAl, che regulatory body for British travel agents

■ Housing associations - in the UK, independent, not-for-profit bodies that provide low cost 'social housing" /or people in housing need

■ Groups of individuals carrying on a business, for example cooperatives, but not partnerships (see Unit 19)

All companies resident in the UK are subject to Corporation Tax on their profits in an accounting period. A non-UK incorporated company may also be subject to Corporation Tax, if it is managed and controlled from within the UK.

Although Companies House notifies the Inland Revenue - the UK tax authority - of che formation of a company on completion of registration, it is still the responsibility of the company to inform the Revenue of its existence and liability to pay tax. This must be done within 12 months of the end of the company's accounting period. An accounting period starts when a company first becomes chargeable to Corporation Tax or when the previous accounting period ends. It cannot exceed 12 months for the purpose of tax. The normal due date for the payment of tax is no later than nine months plus one day after the end of the accounting period, although large companies - that is, those with annual profits in excess of л stipulated amount - are obliged to pay their tax early by Quarterly Instalment Payments.

Word combinations with Чах'

avoidance trying legally to minimise the tax to be paid, for example by

using tax loopholes (gaps in the law)

benefits	advantages
bill	demand for money owed in raxes
chargeable	tax that may he levied on profits
due	tax thar has to be paid by a required date
efficiency-	ways of reducing taxes owed
evasion	illegally trying to not pay tax'
exemption	a principle permitting freedom from payment of tax. For example, non-profit-making organisations may claim tax exemption.
point	date at which a tax begins to be applied
relief	help, allowing a company (or individual) not to pay tax on part of their income

Tax Return form issued by the taxation authorities for declaration of income

and allowances, also known as a declaration

Professional English in Use Law

.1 Replace the underlined words and phrases with alternative words from A opposite. Fas-attention to the grammatical context. There is more than one possibility for one of the answers.

1 Will you formally inform the Inland Revenue?

2 I believe it's a business run by a group of owners who share the profits and the work.

3 The figure named is currently £1.5 million.

4 We're going to be taxed on money received from sales of goods or services after costs have been deducted.

5 How long have we got until the day on which payment is required?

6 There'll be some tax on money from sale of assets this year.

7 Don't forget, you'll have to pay tax by payment or part of the total sum due.

8 1 don't think there'll be much tax on money from investments in this accounting period.

9 Profits aren't going to be greater than £l million this year.

26.2 Complete this extract from an advisory email from a solicitor wirh word combinations from В opposite. Use each combination only once.

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Send Chat Attach Address Pouts Colours Save As Draft

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From: [e-mail]

To: [e-mail]

Subject: UK tax liability

Dear Bertil,

In answer to your query about UK tax liability, I've set out a brief outline below.

The responsibility for the calculation of the tax due lies with the company. Tax is

generally (1)............................... on the company's total profits - including chargeable gains. A

company must follow the special rules in calculating the tax due and, following this self-
assessment, submit a Company Tax (2)....................................... to the Inland Revenue together

with the payment of tax (3).................................

If there has been expenditure on research and development, companies may qualify for

special tax (4)................................ on part of their income. Although there is no annual tax

(5)............................ for capital gains, roll-over relief may be available where business

assets are replaced and trading losses are normally set against income and gains of the
same accounting period or even of the previous year. The rules setting out these reliefs
and others are complex, and companies generally employ specialist advisers to help
maximise their use of the various reliefs in order to minimise their tax (6)......................................................

The fact that corporate tax rates in the UK are lower than income tax rates (to which individuals are subject), and that company dividends (which the owners of a company can pay to themselves) are taxed more lightly than other forms of income, means that

businesses may opt to incorporate primarily to enjoy such tax (7).................................................... Again,

specialist advice may be sought by non-incorporated businesses that wish to calculate

the tax (8)................................ of such an option.

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