To forecast corporation tax, create two formula predictions:
One to build the corporation tax liability
One to pay the liability when it becomes due
The examples below use:
Corporation Tax: Expense account
Provision for Corporation Tax: Current Liability account
Before you start
Create formula predictions in the required forecast
Build the corporation tax liability
Create a formula prediction with the following settings.
Setting | Value |
Account | Provision for Corporation Tax. |
Output frequency | Monthly. |
Output on day | Last day of the month. |
Cash flow payment treatment | Non-cash transfer. |
Balancing account | Appropriate Corporation Tax expense account. |
Create a formula that calculates corporation tax from your net profit.
EXAMPLE: To calculate corporation tax at 19%:
@Net Profit * 0.19
If required, exclude individual accounts from the calculation by updating the formula.
Create the corporation tax payment
Create a second formula prediction to clear the liability when the payment becomes due.
For an organisation with an April to March financial year, the payment falls due on 1 January.
Use the following settings:
Value | Setting |
Account | Provision for Corporation Tax. |
VAT/GST/Sales tax | 0% |
Output frequency | Annually. |
Output date | 1 January. |
Cash flow payment treatment | Same day payment |
Use the LASTYEAR function to reference the liability at the end of the previous financial year.
EXAMPLE: 0 - @Provision for Corporation Tax LASTYEAR
This creates a negative value that clears the outstanding corporation tax liability.