Corporation Tax Refund Last Year

Accounting
1

Hi,

My company made a loss for year June 2021 to May 2022 and I’m about to receive a corporation tax refund.

How do I account for this in Quickfile please?

Thank you.

2

The corporation tax calculation would have been (should have been?) recorded in QuickFile as part of your year end journals, which would normally debit the P&L code that shows the tax expense for the year and credit a balance sheet code to show the liability that you owe HMRC. But in your case since you’re due a refund that journal would credit the P&L code and debit the balance sheet one, showing the amount you’re due from HMRC as an asset.

When you receive the refund you would tag it against this same balance sheet code. I’m slightly hazy on the exact names and code numbers for these nominals as I only have a sole trader QuickFile account, but it may be as simple as tagging as a “tax refund”, or you may need to use “something else not on the list”.

1 Like
3

Hi Ian,

thanks for taking the time to reply.

I’ve seen on another post that there is an option to tag the refund as ‘Corporation Tax Refund’ and was wondering if it does all the P&L and Balance Sheet journals automatically or whether is better to do it manually (which I don’t know how to do).

4

The bank tagging option will only do the balance sheet side. The issue is that you need to account for corporation tax due to (or refund due from) HMRC in your P&L for the accounting year to which it pertains, but the actual payment or refund will happen during the following year. Once you know from your accountant how much tax you owe or are owed for a given year you need to make a journal dated on the last day of that accounting year to create the P&L entry and balance it with a balance sheet entry for the corresponding liability (or asset, in the refund case).

It is this balance sheet account that then gets offset when you tag the bank transaction at the point when the money actually moves.

Journals can be found under “reports” in QuickFile, and someone who knows about limited company book keeping will need to chip in and tell you the exact nominal codes you need to use - I’ve only ever used QuickFile as self-employed.

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5

When you receive money in your bnk for CT refund, click tag and pick the option
Tax refund from HMRC (e.g. VAT, PAYE or Corporation Tax) > Corporation Tax and that is it

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