Corporation tax

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What nominal code do I use in Sage Line 50 for Corporation Tax?

You don't have a code, you have 2!

In a typical scenario a Corporation tax is calculated and allowed for but not paid until some later date paid quite possibly in the next financial year.

To account for this we have a Corporation Tax account and a Corporation Tax Liability Account.

The Corporation Tax liability account acts as a control account to ensure that when all the payments to the revenue have been made, the whole amount has been used and that there have been no duplicated or missed payments.

The Corporation Tax Liability Account is typically at 2160

The Corporation Tax account is near to the Reserves account 3290 is a popular choice, typically this is moved into the main P&L 3200 at year end.

The process comprises of a journal to set up the liability, then one or more bank payments to clear the liability and a journal to deduct the dividends from the retained profit and loss.

1/ Journal - Credit Corporation Tax Liability (2160) - Debit Corporation Tax (3290)

2/ Make payments from the bank account of your choice and check the Liability account is zero and that all payments have been made and non duplicated.

3/ At year end Journal - Credit Corporation Tax (3290) Debit Retained earnings / P&L (3200)