With the advent of digital technology for quite a while now, it has become desirable for banks, financial institutions, corporates or even individuals to upload files and returns online, in keeping with secured transactions and compliance. This saves time, resource investment and has become mandatory too. HMRC has introduced a simple online accounts filing tool in place of downloading a Corporate Tax (CT) form called Company Accounts and Tax Online (CATO), can be accessed with a company’s own unique credentials which can be directly passed on to their accountant, who will then file the returns with ease.
Although this is a boon for most organizations, there are restrictions and rules that companies have to comply by before being able to use this service. In order to understand better, let us briefly look at the requirements of CT online filing, before we go into the criteria for companies who cannot use CATO (HMRC’s free filing service), for a better understanding:
From 1st April 2011, companies were required to file their corporate tax returns electronically for all AP’s that ended on or after 1st April 2010, using HMRC CT Online Services.
Companies and Agents had to register themselves; the accounting figures and their related computations had to be mandatorily filed in iXBRL format.
This was also applicable to overseas companies resident in the UK and any non-resident company trading in the UK through a permanent establishment.
Any electronic return had to include all the following:
All supplementary pages that were required
The accounts and computations
Any required elections
The only exemptions in this official tax computation rule were:
Companies that were run entirely by individuals who are practising members of a religious society need not file returns.
Insolvent companies within a procedure of formal administration /winding up procedure did not have to file.
Unincorporated charities, clubs and societies could choose to file their accounts in either iXBRL or PDF formats.
Accounts are accepted from smaller charities in PDF format.
No computation is required where the CT600E (Charities and Community Amateur Sports Clubs (CASCs)) supplementary page of the return is completed and confirms that all income and gains of the charity are exempt from tax.
So which are the companies that cannot use CATO? What are the terms and conditions currently associated with the use of the service? Here is a list of the rules for your easy reference:
A company cannot use the free CATO service if any one or more of the following apply:
Company accounts require an audit or have been audited
Company turnover is above £632,000 per year
Charity turnover is above £6.5 million per year
Company must pay its Corporation Tax in instalments
Company is part of a group
Company is not registered in the UK
Company is in liquidation or receivership
Company is an insurance company, excluding independent insurance brokers
Company is an investment company
Company is a credit union
Company is a commercial property management company
The accounting period for the return for Corporation Tax is covered by more than one set of statutory accounts
Company needs to claim a repayment of a loan to a participator (e.g., a director’s loan), more than 9 months after the end of the accounting period
Now that you have all the necessary information on the pre-requisites to qualify for usage of CATO, maybe it’s time to evaluate if you need help with further procedures of your tax filing? You can contact us for any queries and conversations about your financial statement conversion on firstname.lastname@example.org