Paying Corporation Tax & Filing Obligations
The Self-Assessment system 'Pay & File' applies to companies. The obligations of a company with regard to paying Corporation Tax and filing its return are as follows:
- Compute and pay its preliminary tax liability by the specified date (see below).
- File its return of income (including audited accounts where applicable) within nine months of the end of the accounting period. If this date is after the 21st of the ninth month the filing date is brought forward to 21st of the ninth month or 23rd in the case of returns filed electronically (21/23 day rule).
- Pay any balance of tax due when lodging the return i.e. within nine months of the end of the accounting period, subject to the 21/23 day rule.
Preliminary Corporation Tax
- A company is obliged to pay to the Collector General the amount of preliminary tax appropriate to the accounting period.
- The total amount of preliminary tax paid must be equal to or greater than 90% of the company's final liability for the accounting period.
- Special provision is made for small companies whose liability does not exceed €200,000 in the preceding chargeable period - see below *, **, ***.
A small company is a company whose Corporation Tax liability in the preceding accounting period does not exceed €200,000. Such a company has the option of basing its preliminary tax on the corresponding Corporation Tax liability for the preceding accounting period.
New or Start-up companies with a Corporation Tax liability of €200,000 or less for their first accounting period will not be required to pay Preliminary Tax in respect of that first accounting period and will instead be required to pay their final Corporation Tax liability for that accounting period at the same time as they are required to submit their Corporation Tax return, i.e. within nine months after the end of the accounting period, subject to the 21/23 day rule referred to above.
When is Preliminary Corporation Tax due?
- For companies with a tax liability not exceeding €200,000 (in their previous accounting period), preliminary tax is payable in one instalment 31 days before the end of the accounting period, subject to the 21/23 day rule referred to above.
- Finance (No.2) Act 2008 provides for revised arrangements for the payment of preliminary tax by large companies with a tax liability of more than €200,000 (in their previous accounting period).
- The new arrangements provides for payment of preliminary tax by large companies in two instalments.
- The first instalment will be payable in the 6th month of the accounting period (i.e. 21st/23rd June for a company with calendar year accounts) and the amount payable will be 50% of the corporation tax liability for the preceding accounting period or 45% of the corporation tax liability for the current accounting period.
- The second instalment will be payable (as before) in the 11th month of the accounting period i.e. 21st/23rd November for a company with calendar year accounts) and the amount payable will bring the total preliminary tax paid to 90% of the corporation tax liability for the current accounting period.
- The revised arrangements apply generally where the accounting period is more than 7 months in length (for shorter accounting periods, preliminary tax of 90% of tax liability is payable in one instalment as before)
In order to minimise the interest charges that would otherwise arise for large companies if their preliminary tax payments fell short of 90%, notional allocation of preliminary tax payments between group members for the purposes of assessing the adequacy of preliminary tax payments made by the group for interest charges purposes is now permissible. It is important to note, however, that for such aggregation to take place the claimant company must pay 100% of its Corporation Tax liability by its return filing date. A company wishing to avail of the provisions of this legislation, should complete and submit this Form - Notional allocation of Preliminary Corporation Tax payments in accordance with Section 958 (11) of the Taxes Consolidation Act 1997 (PDF, 128KB)
Balance of Tax
Under the 'Pay & File' system the balance of tax due is payable at the same time as the company is due to file its return i.e. within nine months of the end of the accounting period, subject to the 21/23 day rule referred to above.
Corporation Tax Return
- A company must submit a return Form CT1 - Pay and File Corporation Tax Return 2012 (for accounting periods ending in 2012) (PDF, 680KB) and where applicable, a Form 46G (Company) - Return of Third Party Information for the year ended 31 December 2010 (PDF, 563KB) and a set of audited accounts within nine months of the end of the accounting period to which the return relates.
- Companies may file their CT1 return electronically under the ROS system
- If the accounting period ends after the twenty-first day of the month, the filing date is brought forward to the 21st of the month or 23rd in the case of returns filed electronically.
- Form CT1 incorporates Extracts From Accounts' pages in place of a requirement to submit full audited accounts of the company. A full set of accounts must be submitted where the turnover exceeds a limit set out in the relevant Form CT1.
- Returns should be filed with the Collector General's Division, PO Box 354, Limerick, unless they are being filed electronically.
Late submission of returns
- If a company fails to submit a return on time, a surcharge will be imposed.
- The surcharge is 5% of the tax due (up to a maximum of €12,695) in the case of a return lodged within 2 months of the return filing date, and 10% of the tax due (up to a maximum of €63,485) where the return is made more than two months after the return filing date.
- In addition to the surcharge, there are restrictions on the use the company can make of certain reliefs and allowances in the event of the return not being lodged on time.