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bigduckontax
bigduckontax, Accountant
Category: Tax
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I have a UK corporation tax question for ?accountants.

Customer Question

Hello I have a UK corporation tax question for ?accountants. I am director of a small limited company (let's call it Company A). I use HMRC online C/Tax service to submit accounts. If Company A buys a few (less than 50%) shares of Company B of which I am also a director, and Company B pays dividends, can I still use HMRC online C/Tax service to submit accounts? or do I have to use an accountant or buy commercial software to file accounts?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I am Keith, one of the experts on Just Answer, and happy to be able to help you with your question. CT returns can only be filed on line. You can continue to use HMRC's own CT600 for this purpose. Remember that dividends paid by Company B to Company A are Franked Investment Income effectively outside the CT envelope. However, this all changes in April 2016 when dividends up to 5K for individuals will be tax free as will dividends paid within ISAs. If you have the time Monevator have a very comprehensive summary here: http://monevator.com/how-uk-dividends-are-taxed/ It is a good red for a wet afternoon. I do hope that my reply has been of use to you. The HMRC CT600 system is a pain to operate. Always remember that it is actually a Balance Sheet and a Profit and Loss Account so items common to both must correspond or the whole system just locks up on you with error messages. I find it very inefficient; in the days of paper CT600s it took about five minutes at the outside to complete, now it take at least half an hour as the system caters for both the likes of ICI and Mr Patel's corner shop!
Customer: replied 2 years ago.

Thanks for your help again. I think the question I meant to ask is "Is the simple accounts template which is free to use on HMRC adequate for a company which invests in another company's shares? or do I need to do accounts in another format then ixbrl them or whatever?" I know what you mean re error messages which are slow to clear after amendments, but as I only do accounts for 2 companies I just put up with it!

Expert:  bigduckontax replied 2 years ago.

Likewise, I do it for rather more and it's still a pain! It usually gets easier the longer you run the ornagisations.

Yes the free to use format should work with your companies with a bit of juggling with Company A.

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Expert:  bigduckontax replied 2 years ago.
Thank you for your excellent support.
Customer: replied 2 years ago.

As follow-up to the internet article you referred me too, I had read a useful one too, perhaps better laid out, re dividend tax - on http://www.hl.co.uk/news/articles/budget-2015-changes-to-dividend-tax-explained?utm_source=Silverpop&utm_medium=email&utm_campaign=E00IC_NEW%20Investors%20Chronicle_175%20(1)&utm_content=article2&theSource=E00IC&Override=1&sp_mid=49070962&sp_rid=d2lsbHlyb3NzQGdtYWlsLmNvbQS2 - you might be interested. Regards.

Expert:  bigduckontax replied 2 years ago.

Thank you for that tip, a very good summary.