Syllabus for ICB Level 4 Certificate - Corporation Tax Returns (FRS105 + FRS102 (Section 1A)

Underpinning Knowledge

Identify the duties and responsibilities of a tax agent: Understand that ICB expects its members to maintain a high ethical standard; Understand the requirements needed to act as a tax agent online with HMRC

Identify the elements of a Corporation Tax Computation: Explain the principle of a chargeable accounting period

Calculate Adjusted Trading Profits

Outline the purpose of adjusted trading profits and identify disallowable expenditure: Explain how profits are adjusted; Identify expenditure considered disallowable; Explain the treatment of dividends; Identify bad debts as an allowable deduction; Explain the treatment of interest payable on trading loans; Explain treatment of hire and lease charges; Identify income in the accounts but not taxable as trading profit.

Compute adjusted trading profit for the period: Correctly compute adjusted trading profit for accounting periods of longer or shorter than twelve months.

Capital Allowances – Plant and Machinery

Explain the nature and purpose of capital allowances: Distinguish between depreciation and capital allowances; Identify qualifying expenditure; Identify the main types of capital expenditure and the capital allowances available.

Prepare a computation for capital allowances: Prepare a computation for the following capital allowances (Expenditure not pooled, General or main pool, FYA – First Year Allowance, AIA – Annual Investment Allowance, WDA – Writing Down Allowances, Balancing Charges, Motor Vehicles v Motor Cars, Expensive Cars, Short Life Assets); Apply cessation rules for capital allowances in the closing years of business.

Calculation of Profits Chargeable to Corporation Tax

Determine profits chargeable to corporation tax: Identify adjusted profit and capital allowances; Explain the treatment of dividends paid; Explain the treatment of interest received and interest paid; Explain the treatment of (Royalties, Dividend Income, Property Income).

Determine the Corporation Tax Liability: Calculate profits chargeable to corporation tax; Apply relevant tax rates.

Complete a CT return: Complete elements of a CT return.

Gains, losses and reliefs

Explain the procedure for determining gains and losses Apply Indexation allowance; Explain the following special rules (Enhancement expenditure, Part- disposals,Non-wasting chattels).

Distinguish between Trading and Non-Trading Losses Determine adjusted trading losses; Apply types of loss relief (Current year relief, Carry back relief, Carry forward relief, Terminal Loss Relief), Calculate Non-Trading and Capital Losses.

Apply reliefs, deferrals and exemptions: Explain the principle of Entrepreneurs’ relief; Identify qualifying business disposals qualifying; Ownership period; and apply the relief; Apply the principle of Rollover relief (Conditions for relief, Partial reinvestment); Identify the principles of, and conditions for, gift relief.

Payment and Administration

Explain the process of payment and administration: Explain the process of Corporation Tax Self-Assessment; Understand how to (File the return, Amend the return, Deal with errors, Identify interest on late payment, Identify interest on tax overpaid); Explain the penalty process; Explain HMRC powers of enquiry, Identify the payment date and when payment by instalments is appropriate; Explain the records which companies must keep and the timescales for keeping them.