The Tax and Customs Administration states on its website that the tax assessment notice for the provisional corporation tax assessment is changing.
Changes
There will be a single heading, “Total tax relief”, which will incorporate the following headings:
- equity method accounting;
- and tax set off against foreign business profits.
The amendment applies only to provisional tax assessments for the 2019 tax year and subsequent years.
PLEASE NOTE!
As a business owner, this change is probably not particularly exciting for you. Your accountant or tax adviser will check whether these sections, where applicable, have been correctly included in the provisional tax assessment.
It is, however, very important that you take a moment soon to check your provisional corporation tax assessments. The Tax and Customs Administration will be sending out the provisional assessments for 2019 shortly. But please also check carefully that the provisional assessment issued for 2018 is correct. Now that 2018 has come to an end, you probably have a reasonable idea of the expected taxable profit. If you have not yet received a provisional assessment, it may be wise to request one from the Tax and Customs Administration.
Tax interest rate
This is due to the enormous rate applied by the Tax and Customs Administration when calculating tax interest. This rate amounts to no less than 8% on an annual basis. That may be a good reason to pay your corporation tax before the interest period begins.
Tax interest is payable if the (provisional) tax assessment is issued with a date falling more than six months after the last day of the tax year. If your financial year coincides with the calendar year, the 2018 tax year ended on 31 December 2018. The Tax and Customs Administration will then charge tax interest on assessments dated 1 July 2019 or later.
Tax interest is calculated on corporation tax due (the Tax and Customs Administration almost never refunds tax interest). The interest period begins 6 months after the end of the tax year and ends on the last day of the payment period. The payment period ends 8 weeks after the date of the tax assessment.
Income tax
The Tax and Customs Administration also applies a substantial rate for the calculation of tax interest in the context of income tax: 4%. If you submit your 2018 tax return before 1 April 2019, you will receive a (provisional) tax assessment before 1 July 2019 and no tax interest will be charged. If you submit your tax return before 1 May 2019, the Tax and Customs Administration may still be able to issue the tax assessment before 1 July 2019. If you intend to submit your 2018 tax return later, you must ask the Tax and Customs Administration for an extension (your accountant or tax adviser will often make this request on your behalf). When making the request for an extension, you should also check straight away whether it would be advisable to request a (further) provisional tax assessment.