Tax question for limited company

B

Bill90.

Registered User
Messages
117
Hi everyone,

Just a couple of tax questions if anyone can help. Probably simply enough but I couldn't fine a clear answer online.

1, Is a basic Taxi / minibus company subject to the close company surcharge if some profits are left in the company?

I think I know the answer to this second question (no) but I'll ask anyway.

2, Are monthly corporate investment payments deductible for CT calculation in the same way pension payments would be? Say both pension and corporate investment acc with Standard Life investing in the same fund.

Thanks.
 
The pension payments are presumably for an employee and/or a director, so they are normal business expenses

What are the payments to the corporate investment for?
If they company holds investments, then no that is not an allowable expense any more than lodging cash into the companies bank is - all the company is doing is moving one asset (cash at bank) to another asset (investment)
 
Bill90. said:
1, Is a basic Taxi / minibus company subject to the close company surcharge if some profits are left in the company?
Click to expand...
What business the company carries on is irrelevant. Whether it's a close company or not depends on who controls it, not what it does.
Bill90. said:
2, Are monthly corporate investment payments deductible for CT calculation in the same way pension payments would be? Say both pension and corporate investment acc with Standard Life investing in the same fund.
Click to expand...
The corporate investment payments won't be treated like pension contributions because they're not pension contributions. As JPD says, if the investment account with Standard Life is simply the place where the company holds some of its accumulated retained profits, then amounts credited to that account are not deductible.
 
The advantage of these investments is that the amounts invested are not liable for the close company surcharge
 
Fortune said:
The advantage of these investments is that the amounts invested are not liable for the close company surcharge
Click to expand...
Open to correction but, as I understand it, the position is:
  • The profits generated by the company's taxi/minibus operation are not subject to the close company surcharge (because they are not "estate and investment income"). They are, however, subject to corporation tax in the ordinary way.
  • Paying the profits into a "corporate investment account with Standard Life" will not avoid corporation tax in the same way that using themto pay pension contributions would (the question the OP asked).
  • The return earned on the corporate investment account are subject to corporation tax in the ordinary way.
  • But, because they are estate and investment income, they will also attract the close compay surcharge if not distributed to the participators who own/control the company.
 
Ah, OK, right.

Looks like an honours-level question to me, and not one I'd attempt to answer without doing a fair amount of research. The material produced by Standard Life that you link to suggests to me either that they are not entirely convinced of the answer themselves, or that they think the answer may vary from company to company, depending on the circumstances of the company.

Either way, if the OP wants an answer to the question that he can rely on, I think he's going to have to pay for a professional opinion.
 
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