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taxadvisor.uk, Chartered Certified Accountant
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Hi, I'm filling HMRC CT600 online and have some questions in

Resolved Question:

Hi, I'm filling HMRC CT600 online and have some questions in regard of some numbers as I'm doing the report first time.
Submitted: 2 years ago.
Category: Tax
Expert:  taxadvisor.uk replied 2 years ago.

Hello and welcome to the site. Thank you for your question.

Aya, please advise what your concerns are and I will help you.

Many thanks

Customer: replied 2 years ago.

Hi. Thank you for the reply.

My colleague and I started a very small business last year, on 19th Feb 2013. As a start, we put £500 each to open a business account and to cover initial expenses such as developing website, ordering business cards, etc. Also as per Companies House requirement we had to have shares and we agreed to have one share each, with nominal value £1 per share.

Even though we registered in Feb 2013, our actual activity started only at the end of 2013. Also due to the specific of the business the turnover is extremely low and wouldn't even cover our expenses for the reporting period.

We have to report our accounts to HMRC and Companies House and I'm using HMRC site for online reporting using CT600. I've done part of the form but have got an error message and need to understand what I'm doing wrong. I need few clarifications in regard of:

- AC14 Cost of sales. As per the CT600 guidance, cost of sales is calculated as opening stock value plus cost of purchases minus cost of closing stock. What would be the opening stock value in our case? Should I count the cash that we put on to the bank account as the opening stock? Or the opening stock in our case is 0?

- AC34 Tax on profit or loss on ordinary activities. As we have losses, should I calculated tax on losses? What rate I should use? At the moment I put £0 in this field but I'm not sure if it's correct.

- AC38 Dividends for the period. What should I put here? Our 2 shares are really just on paper. Should I still say that we are going to pay £2 of dividends?

Thank you.

Hope to hear from you soon.

Kind regards,

Aya.

Expert:  taxadvisor.uk replied 2 years ago.
Aya, thank you for your reply and for additional information

[q]
- AC14 Cost of sales. As per the CT600 guidance, cost of sales is calculated as opening stock value plus cost of purchases minus cost of closing stock. What would be the opening stock value in our case? Should I count the cash that we put on to the bank account as the opening stock? Or the opening stock in our case is 0?

[a]
Your opening stock is zero as it is your first year of trading. Cash you pit into the business is for share capital and funding of working capital and your cash injection is a balance sheet item.

[q]

- AC34 Tax on profit or loss on ordinary activities. As we have losses, should I calculated tax on losses? What rate I should use? At the moment I put £0 in this field but I'm not sure if it's correct.


[a]
You should leave this box blank as there is no provision for tax on losses.

[q]
- AC38 Dividends for the period. What should I put here? Our 2 shares are really just on paper. Should I still say that we are going to pay £2 of dividends?

You should not put any figure in that box as you would not have paid any dividends to yourselves (as shareholders). Dividends are paid out of taxed profits as they are distribution of profits after tax to shareholders as a return on their investment. No profits mean no dividends.

I hope this is helpful and answers your question.

If you have any other questions, please ask me before you rate my service – I’ll be happy to respond.

Customer: replied 2 years ago.

Great! Thank you for the clarifications. I'll try again to work with the form but will come back later today if I will need more clarifications. Hope it's ok?

Expert:  taxadvisor.uk replied 2 years ago.
Many thanks
Customer: replied 2 years ago.

It seems that the balance sheet is rather straightforward though I still need some advice:

- Fixed assets: we do not produce goods but provide intellectual services (history tours). We have own website and online pages (Facebook, Meetup). If a website or online page are considered as an asset? I do not count our personal computers as an asset to keep the reporting simple.

- Current assets: we only have funds on our bank and Paypal accounts. What about shares? How and where should I show them?

I'm sorry for all these questions. I'm not an accountant, though I've done self-employment tax returns for last few years. It seems business reporting is more complex even though our accounts are so simple.

Expert:  taxadvisor.uk replied 2 years ago.
Aya, thank you for your reply.

In your original questionyou had stated "Doing Corporation Tax and need help with CT600 form as it's a first time I'm doing it. Questions mainly about profit and loss numbers."

I have answered questions relating to p&L section.. now you are raising questions on balance sheet and then you will ask questions on other sections..

You could consider the value of a website as an asset, and also the cost of PCs owned by the company.

Monies held in bank account and Paypal account would be current assets. The payment for shares issued would also be treated as cash.

Shares issued would be part of capital and reserves.

I hope this is helpful and answers your question.
taxadvisor.uk and other Tax Specialists are ready to help you
Expert:  taxadvisor.uk replied 2 years ago.
I thank you for accepting my answer.
Your reward of a bonus is greatly appreciated.

Best wishes.