10 Common CT600 Mistakes and How to Avoid Them
Even experienced directors make CT600 mistakes. Some cost money in overpaid tax. Others trigger penalties or HMRC enquiries. Here are the most common errors and how to avoid them.
1. Missing the Filing Deadline
The mistake: Forgetting the CT600 is due 12 months after your accounting period ends.
Why it happens: Companies House accounts are due at 9 months, so directors assume CT600 follows the same timeline.
The cost:
- 1 day late: £100
- 3 months late: Another £100
- 6 months late: 10% of unpaid tax
- 12 months late: Another 10%
2. Wrong Accounting Period Dates
The mistake: Entering incorrect start or end dates for the accounting period.
Why it happens: Confusion about when the period actually runs, especially for first-year companies.
The cost: HMRC may reject the return or apply it to the wrong period.
How to avoid: Check your accounting reference date on Companies House. Your period ends on this date each year.
3. Forgetting to Claim Capital Allowances
The mistake: Not claiming tax relief on equipment, computers, and other capital purchases.
Why it happens: Directors include depreciation in accounts but forget depreciation isn't tax-deductible—capital allowances are the replacement.
The cost: Paying tax on money you didn't really profit. For a £5,000 computer at 19% tax, that's £950 in unnecessary tax.
How to avoid: Review your fixed asset purchases and claim Annual Investment Allowance (up to £1 million at 100%).
4. Including Disallowed Expenses
The mistake: Claiming expenses that aren't tax-deductible.
Common disallowed items:
- Client entertainment
- Personal expenses
- Fines and penalties
- Political donations
- Certain legal costs
How to avoid: Separate disallowed expenses in your accounting records. Add them back when preparing the CT600.
5. Incorrect Treatment of Director's Salary
The mistake: Not including director's salary as an expense, or processing it incorrectly.
Why it happens: Sole directors sometimes blur the line between company money and personal drawings.
The cost:
- If not claimed: You pay more corporation tax than necessary
- If overdone: Potential HMRC investigation
6. Missing Bank Interest Income
The mistake: Not declaring interest received on business bank accounts.
Why it happens: The amounts are often small and easy to overlook.
The cost: Understating income. If discovered, you'll owe additional tax plus interest.
How to avoid: Check every bank statement for interest credits. Include all interest, even small amounts.
7. Confusing Dividends With Income
The mistake: Including dividends received from other companies as taxable income.
The reality: Most dividends received by UK companies from other UK companies are exempt from corporation tax.
The cost: Overpaying tax unnecessarily.
How to avoid: Understand the dividend exemption rules. Most small company dividends shouldn't increase your tax bill.
8. Incorrect Associated Company Count
The mistake: Not declaring associated companies, or counting them incorrectly.
Why it matters: Associated companies reduce the thresholds for small profits rate:
- No associates: £50,000 lower limit
- 1 associate: £25,000 lower limit
- 4 associates: £10,000 lower limit
How to avoid: Identify all companies controlled by the same persons (including family members). Count them all.
9. Failing to Carry Forward Losses
The mistake: Not claiming losses from previous years against current profits.
Why it happens: Directors don't realise losses can be carried forward, or don't have records from prior years.
The cost: Paying tax when you have losses available to offset it.
How to avoid: Keep records of all trading losses. Check your brought forward loss position before filing.
10. Submitting Without Review
The mistake: Filing the CT600 without carefully checking all figures.
Why it happens: Rush to meet deadline, over-reliance on software, or assumption that auto-calculated figures must be correct.
Common errors found on review:
- Opening balances don't match prior year
- Missing transactions
- Duplicate entries
- Wrong period allocated
Less Common But Costly Mistakes
Forgetting iXBRL Accounts
Your CT600 must include accounts in iXBRL format. Filing without them results in rejection.
Wrong Company Type
Selecting the wrong company type (micro, small, medium) affects what accounts are required and may cause validation errors.
Not Claiming R&D Credits
If your company does qualifying research and development, you may be missing significant tax relief.
Ignoring Director's Loan Rules
If the company lends money to directors, S455 tax may apply. Forgetting this creates a nasty surprise.
How to Catch Mistakes
Before Filing
| Check | How |
|---|---|
| Compare to last year | Are figures reasonable? |
| Bank reconciliation | Does cash match? |
| Trial balance | Does it balance? |
| Expense review | Any obvious omissions? |
Software Validation
Good CT600 software will flag:
- Missing required fields
- Mathematical errors
- Impossible combinations
- Common data entry mistakes
Professional Review
For complex situations, consider having an accountant review before submission.
What To Do If You Find a Mistake
Before Filing
Simply correct it. No harm done.
After Filing (Within 12 Months of Deadline)
Submit an amended return. Most software has an amendment function.
After 12-Month Window
Contact HMRC. Options are limited but may include error relief claims.
Frequently Asked Questions
What's the most expensive mistake?
Missing capital allowances claims on large purchases. A £50,000 investment not claimed costs £9,500 in unnecessary tax (at 19%).
Will HMRC spot mistakes?
Often, yes. HMRC uses automated systems to cross-reference returns, VAT, and other data. Obvious errors get flagged.
Do I need an accountant to avoid mistakes?
Not necessarily. Software like TinyTax guides you through the process and catches common errors. Complex situations may benefit from professional input.
What triggers an HMRC enquiry?
- Returns that look unusual
- Figures that don't match other returns
- Random selection
- Inconsistent year-on-year patterns
Summary
| Mistake | Cost | Prevention |
|---|---|---|
| Missing deadline | £100+ penalties | Calendar reminders |
| Wrong dates | Rejection | Check Companies House |
| No capital allowances | Overpaid tax | Claim AIA on assets |
| Disallowed expenses | Adjustment + penalty | Know the rules |
| Missing income | Back tax + interest | Check all sources |
| No loss claim | Overpaid tax | Track losses |
| No review | Various | Build in review time |
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