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Systems control: monitoring filing and submission deadlines

It is crucial to practice management to have systems that ensure client deadlines are monitored and effectively managed. Does your system cope with the “oddities” that inevitably arise? In this first of three articles, we look at some areas of concern.

Every firm is different. An ‘average’ small firm (if there is such a thing) will use commercial software to monitor personal tax return deadlines and one (or more!) Excel spreadsheets to monitor the deadlines applicable to corporate clients.

Such a set-up will work in the majority of cases, but there may be gaps in the net. Take the points below.

Long periods

Where companies are concerned, a long financial statement period leads to two corporation tax periods.

If we consider X Limited (a small private company): last year accounts were prepared for the year ended 31 December 2010. The control sheet probably looked something like Table 1:

Table 1

Client Year end Companies House filing deadline Corporation tax payment deadline CT600 filing deadline
Using formula + 9 months + 9 months and 1 day + 12 months
X Limited 31.12.10 30.9.11 1.10.11 31.12.11

The next accounts are prepared for the 15 months to 31 March 2012. This will give rise to two CT600 periods: the 12 months to 31 December 2011; and the 3 months to 31 March 2012.

Without manual intervention, the spreadsheet is likely to generate the following (Table 2):

Table 2

Client Year end Companies House filing deadline Corporation tax payment deadline CT600 filing deadline
X Limited 31.3.12 31.12.12 1.1.13 31.3.13

The Companies House filing deadline is correct as this would still be 9 months after the period end date. However, the tax dates are meaningless as each tax period needs to be considered separately.

In most cases, the CT600 filing deadline for both returns remains as 12 months after the end of the full (in this case 15 month) period of account.

However, the corporation tax payment date is based on 9 months and 1 day after each return period.

The correct table would therefore appear as follows (Table 3):

Table 3

Client Tax period end Corporation tax payment deadline CT600 filing deadline
X Limited 31.12.11 1.10.12 31.3.13
X Limited 31.3.12 1.1.13 31.3.13

If a firm used the automatically produced Table 2, without manual intervention they might incorrectly advise the client that the total corporation tax liability, for the two tax periods, is due on 1 January 2013, potentially leading to a late payment with regard to the first tax period. This would lead to HMRC charging interest on the amount paid late and could give rise to bad feeling from the client.

On the other hand, if a firm were to misunderstand the filing deadlines for the two returns (and assume that the return to 31 December 2011 must be filed by 31 December 2012), unnecessary pressure could be applied in the office and to the client to meet a deadline that is not there!

In the vast majority of cases, deadlines are adequately managed and clients are properly informed. This article should simply be used as a reminder of what can go wrong and the importance of keeping deadline control systems under close review.

July 2012