i cant quite grasp this concept in the “real world”.
the worked examples in textbook i have come across emphasise working the p/l to gross profit and then calculating tax at the “30%” to figure out the net profit after tax

but how does this apply to the real world?

I.e. in corporation tax/self assessment you would have to meet HMRC strict guidelines when calculating the tax and you would usually submit this up to 9 months/12 months after your year end. The HMRC may disagree with your assessment and tax you more. How is this reflected in the accounting statements? I cant get my head around the timing and how the tax is calculated (the real way or the accounting way)

I work in practice and we calculate the tax accurately for the provision in the accounts.

We have never had a recalculation that has been a material amount out but if we did then you would not adjust the accounts (they have had to be at Companies House within 9 months anyway).  If a material amount you may do a prior period error in the next set of accounts and if it is a small amount then you wouldn’t bother.

I suspect in your exam they are just giving you a simpler way to calculate it and enter it into the accounts. In the real world we do all the trading profit adjustments first before applying the relevant corporation tax percentage.

Thanks bluewednesday

I thought the Corp Tax return had to be with HMRC within 9 months but the annual return has to be with the companies house for 28 days after year end?
Be grateful if you could clarify.

Accounts have to be at Companies House within 9 months
CT has to be paid by 9 months and 1 day.
corporation tax return has to be with HMRC within 12 months of year end (assuming 12 month period)
Annual return is at date listed by Companies House (presume annually around incorporation date but not sure off the top of my head).

It’s silly really and we tend to get the ct return in before 9 months because we have to virtually do the return to calculate the tax so it’s very rare to have one go in late (only if directors are late getting them back to us)!!!

Very strange timing!!
I think I was getting confused with AR01 form which needs to be with Companies House within 28 days. But you are spot on.

I just like applying my “studenty” work to the real world, thanks for clearing this up.

Thanks for the info also Bluewednesday.