Back to basics: CT61s and accounting for income tax

When companies make certain payments they are required to deduct income tax at source. Patent royalties received by companies from individuals are received net of 20% tax. For each quarter the company is required to calculate any amounts due to HMRC. These calculations are made on the quarterly return form CT61. The due date for the income tax is 14 days after the end of the quarter.

If the tax suffered by the company exceeds the tax withheld a refund of tax is required from HMRC for that quarter. However HMRC will not repay more than the amount of tax that the company has already paid over so far in the accounting period. Any excess tax suffered is carried forward to a later quarter. If it has not been fully recovered by the end of the accounting period it is deducted from the CT liability. If the...