The date on which the tax has to be paid (it is generally filed by a tax accountant from a professional tax preparation service is determined by the tax accounting period of the company in question. Corporation tax is due 9 months plus one day from the day the tax accounting period ends. In other words, company directors have three months from the date of trading to register with HMRC for corporation tax. Failure to do so results in legal actions.

Consequences of irregular cash flow due to loss

The annual tax payment is due in four instalments for enterprises with profits over £1.5 million and in one instalment for those with income under that amount. Naturally, companies need to have a steady cash flow in their accounts to be able to pay the corporation tax in time. Any hiccup in the cash flow is a red flag and has to be rectified immediately.

If a company faces a downturn in its trade and a dwindling cash flow, the last thing it will like to witness is a substantial corporation tax (CT) bill. Unfortunately, the point is that this might very well be the outcome, because of the manner in which the CT bills are timed. That’s why every professional tax consultant would suggest paying the CT in time.

The rules, however, give the enterprises the leverage to reduce the CT payable on current profits in case they have suffered losses in preceding year(s). However, losses that have been incurred in the current year can’t be set against the CT bill of the previous year, till the accounts for the loss-making period have been prepared and a corresponding claim for the tax relief has been made.

How do Improve the Cash flow? 

It might be helpful for businesses to know whether they can pay their expenses or whether they need to discover methods to bring in more money by considering the payables and receivables.

Therefore, by conducting a comprehensive cash flow analysis, they can determine

the times during which the cash flow will be negative. Also, they can identify strategies to accelerate the inflow of funds that will help pay CT bills on time.

Let us discuss ways to improve cash flow.

Offering discounts as rewards for early payments

If consumers pay their invoices before the specified deadline, a reward in the form of a discount or an incentive can be provided to them. It is a win-win situation for the business as well as the consumers, as they can save money on their purchase, and the business can have a steady cash flow.

Sending invoices at the earliest

A professional tax advisor in Barkham may also suggest businesses consider sending invoices at the earliest. A considerable number of consumers are solvent enough to pay the bill. However, they cannot do so till the invoices are sent. Delay in sending invoices to these clients will needlessly block a certain amount of cash flow. So sending these invoices at the earliest will remove that blockage considerably.

Making a chart of accounts

As an expert tax advisor in Riseley, I know that failure to prepare a chart of accounts may cost the cash flow dearly. A Chart of Accounts (COA) is a detailed list of financial accounts put up that gives businesses an insight of where the company is spending and making money effectively. Once that is prepared, it becomes easier to restructure the accounts to incorporate more efficiency and give the cash flow a shot in the arm.

Forecasting Cash Flow

Often, a tax advisor in Grazeley suggests forecasting cash flow. Enterprises should take some time to project the amount of money that will come into and go out of their coffers on a weekly and monthly basis before diving into their day-to-day duties.

This should be set for a three-month period, but to provide a better overview, businesses may wish to set it for six or twelve months in the long term. In any case, an accurate forecast of cash flow will make it easier for companies to manage and increase it.

Some other means of improving cash flow may include increasing prices, selling of redundant or old stocks, checking the accounts payable terms, opting for second hand purchases of assets, considering leasing our properties, highlighting late payment penalties, eliminating needless expenses, and running credit checks periodically.

A reputable accounting firm will help you in all these. Biz Accounting Solutions Ltd is one of the best names to turn to for that. Call us to book an appointment with our experts to let us know and discuss your needs. You can also write to us for more information.

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Sub-postmasters cannot apply to a single compensation scheme since there is none. The compensation will entirely depend on the eligibility of the individual and the circumstances of his or her case.

There are a few schemes that have been rolled out for the victims affected by the scandal.

Special Exemption: The government has confirmed that postmasters need not pay income tax, capital gains tax, NI contributions, corporation tax or inheritance tax as part of the compensation payment. However, the exemption will apply to postmasters whose convictions are overturned or those who will receive the £75,000 fixed sum payment under the Horizon shortfall scheme.

New Legislation for the Exemption: Despite the exemption, there will be new legislation that will not change the existing compensation rules for employees or other workers. These can be outside the scope of tax and NI but might be taxable depending on the reason for the payment and how it’s paid. So, employers need to follow the current rules and guidance.

Overturned Convictions Scheme: People who have their convictions quashed can apply to the Overturned Convictions Scheme. In this scheme, they can choose to take a £600,000 settlement price. However, if they feel that they are entitled to more than the mentioned sum, they can enter into negotiations.

Interim Payment: Those who are eligible are entitled to the interim payment during the process of their final settlements. Now, the interim payments have been increased from £163,000 to £450,000.

According to sources, more than 4,000 people are eligible for one of the three main schemes. The government has informed that new potential victims are also coming forward.

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Biz Accounting Solutions Ltd will update you on more useful information from time to time. On the other hand, if you require our accounting or bookkeeping services, call us now. For queries, you can send us an email.

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Let us now delve into the ways to reduce your corporation tax on the following points:. Go through them, and if you have further queries, discuss them with your consultant or certified accountant.

• Claim the Deductions and Reliefs 

By claiming the deductions and reliefs, you can reduce the tax. But since various options are available, you should book an appointment with your tax consultant, who can guide you with the same.

Typically, the reliefs and deductions include:

• Capital Allowances: These can be claimed based on the cost of the assets that are used for various business purposes. You can claim these costs as a one-time payment or over several years, gradually.

• R&D Tax Relief: You can claim R&D tax relief if you run a business that deals with technology and science.

• Patent Box: You can get 10% relief on corporate tax if you have made profits from patented inventions.

• Venture Capital Schemes: You can claim tax relief through the Enterprise Investment Scheme (EIS) if you invest in scale-up companies. Besides, the Seed Enterprise Investment Scheme (SEIS) can get you even higher tax relief if you invest in riskier early-stage startups.

• Use the Right Business Structure

The corporation tax is impacted by business structure. So, make sure that you are using the right one. But if you are unsure of the category, discuss your requirements with a Chartered Certified Accountant in Reading. They will evaluate the business structure and properly categorise it.

In general, you will be taxed on your personal profits if you are a sole trader. On the other hand, if you operate through a limited company, you will be taxed on the profits distributed to you as a shareholder.

• Make Business Investments

To reduce your corporation’s tax liability, you should invest in your business. By doing so, you are reducing your profits, thus minimising your corporation tax bill.

You can invest in new equipment, train your employees, and expand your facility.

• Strategise Your Tax Planning

To reduce corporation tax, you can use various strategies. A tax consultant of tax can formulate them for you.

Generally, some of the common methods that you can take advantage of include transfer pricing, offsetting losses, and group relief.

• Professional Advice is Important

Finally, if you do want to minimise your corporation tax bills, you should discuss your requirements with a professional Reading Chartered Accountant with years of experience and expertise in this area.

To conclude, if you follow these 5 steps, you can effectively minimise the taxes and save costs.

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To schedule a consultation with our professionals at Biz Accounting Solutions Ltd., give us a call or send us an email.

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