Corporation tax compliance is a calendar problem before it is a technical one. The return is due twelve months after the period end; the tax is due nine months and a day after it. That gap — payment first, filing later — is the structural feature that catches out every company in its first year and a surprising number thereafter.
The cycle
A company's obligations run in a fixed sequence:
- Notify chargeability within three months of starting to trade, if HMRC has not already issued a notice to file;
- Pay by nine months and one day after the end of the accounting period, for companies outside the instalment regime;
- File the CT600, with the computation and the statutory accounts, within twelve months of the period end;
- Amend, if needed, within twelve months of the filing deadline;
- Retain records for six years from the end of the period.
Everything is filed digitally, with the accounts and computation tagged in iXBRL — machine-readable data rather than a PDF, which is what lets HMRC run automated risk analysis across every return it receives.
Larger companies pay earlier. Those with profits above the threshold pay by quarterly instalments during the accounting period itself, and the very largest pay on an accelerated schedule that begins before the period has finished — meaning the first instalment is based on a forecast of profits not yet earned. Each instalment is based on an estimate of the liability for the period being paid, not on the previous period's result. What the previous period governs is entry: a company is large where profits exceed £1.5m, but one that was not large in the prior year escapes instalments where profits do not exceed £10m — and both thresholds divide by the number of associated companies.
The rates and the arithmetic in between
Corporation tax is 25% on profits above £250,000 and 19% below £50,000, with marginal relief smoothing the band between — producing an effective marginal rate of around 26.5% on profits inside it. Both thresholds are divided by the number of associated companies, which is the detail that catches groups and, more often, owner-managers with several unrelated companies.
Association is tested on control, and it includes companies controlled by the same person or by associates of that person. Two companies owned by one individual are associated even if they trade in entirely different markets and have never transacted — so the £50,000 threshold becomes £25,000 for each, and profits that would have been taxed at 19% are taxed at the marginal rate.
Where the computation actually differs from the accounts
Taxable profit is not accounting profit, and the recurring adjustments are worth knowing because they are where errors live:
Depreciation is added back and replaced by capital allowances — the annual investment allowance, writing down allowances at 14% on the main pool and 6% on the special rate pool for periods from 1 April 2026 (18% before that, with a hybrid rate where the accounting period straddles the change), and full expensing for companies buying new plant. Client entertaining is disallowed entirely. Provisions are deductible only where they are specific and properly calculated rather than general. Accrued bonuses and pension contributions are deductible only if paid within nine months of the period end for bonuses, and when paid for pensions.
Then the specific regimes: losses, with the rules on carry-back, group relief and the restriction above the annual deductions allowance; the loan relationship and derivative rules for finance; the intangible fixed assets regime, with its fixed rate election; research and development relief; and, for groups above the threshold, the corporate interest restriction and the transfer pricing rules.
Penalties, interest and the senior accounting officer
Late filing brings an immediate £200 penalty, another £200 at three months — both rising to £1,000 each where the return is late three times in a row — and tax-geared penalties of 10% of the unpaid tax at six months and a further 10% at twelve. Late payment brings interest at base rate plus 4%, and interest on underpaid instalments runs from each instalment date rather than from the normal due date — which is why a company that underestimates its first instalment pays interest on a liability it did not yet know it had.
Large companies carry an additional personal obligation. Under the senior accounting officer regime, a named individual in a qualifying company must certify annually that appropriate tax accounting arrangements are in place, with personal penalties for failure. It is a governance requirement rather than a numbers one, and it is the reason tax process documentation exists in groups of that size.
Running it well
Three habits separate companies that find this routine from those that do not. Estimate the liability early — at the period end, not when the accounts are finalised — so the payment date is funded rather than discovered. Review the associated company position annually, because it changes with every new incorporation and every change of control. And reconcile the tax computation to the accounts in a format a reviewer can follow, which is what converts an enquiry into a short conversation.
Acumon handles the full cycle — computations, CT600s, iXBRL tagging, instalment forecasting and claims — through corporation tax and tax compliance work, with iXBRL services where the tagging is the bottleneck. If your company has profits near £50,000 and a sister company nobody has mentioned to your accountant, that is the first thing to check.