Corporation Tax

[ummmm]

Just checking that they work a year behind??

Someone has asked me. All I know is...

Took over company in 2010, it's a franchise, they have £100 fine + £5,000 tax bill.

The bill is up to 2010. Am I right in saying that the previous owners are liable??

[Buenchico]

'Normal due dates' for Corporation Tax are explained here:
http://www.hmrc.gov.uk/ct/getting-started/deadlines.htm#3

However whether the 'old' or 'new' owner is responsible for paying the tax bill depends upon the terms of the takeover.

[Skyline D]

A rare case of Chris getting something wrong there.

Corporation Tax, as the name suggests, is a tax on corporations. There is absolutely no doubt who is liable for the tax bill, the company itself is. A company is a corporate entity. It has its own identity regardless of who the owners are. The tax assessment is a liability of the company.

It may well have been a consideration in the sale price for the company's shares that it had an impending tax bill to pay but there is absolutely no liability on former owners or indeed current owners to pay a currently due corporate tax bill. If the company can't pay it then insolvency procedures may follow which has ramifications for the present owners of course.

[buildersmate]

The liability to pay any tax due occurs 9 months after the end of the company year in question. Since we are now in 2013, there must be at least one more tax year where a liability may occur.

[ummmm]

Thanks all. I'll be seeing the paperwork tomorrow so will have more of an idea what's going on.

[1eyedjack]

Skyline D and Buenchico both have points here, I think. Yes the liability to HMRC (and/or companies house) is as Skyline D says, one that falls on the company. However depending on the tax warranties provided and due diligence, the purchasers may have an action against the vendors to recover unrecognised losses (of course, good luck with that).