This guide is going to walk through the two steps required to forecast corporation tax for an organisation.
The first step will be to build the liability, the second step will be to pay off the liability. In this example, we have an account in the Expenses account category called Corporation Tax, and an account in the Current Liabilities account called Provision for Corporation Tax.
We will be using the formula method to create predictions. Predictions can be created in the daily tracker forecast, as well as any budget or scenario.
For more information on how to create a new prediction using the formula method, please take a look at this help guide.
Build the liability
Step one is to build the build the balance in the liability account.
The prediction will need to:
Be set against the balance sheet account (Provision for Corporation Tax in this example)
Have an Output Frequency of Monthly
Be set to have the last day of the month as the Output on day
Have the Cash flow payment treatment set to a Non cash transfer
Select the appropriate balancing account
The formula itself will be the Net Profit multiplied by 0.19 to find 19%.
If you have any account(s) that would be excluded from this calculation, you can simply add them into the formula.
Pay off the liability
Once the balance builds, the next step is to pay it off.
In this example, we're looking at an organisation with a April to March financial year. Therefore, the payment will be due on January 1st.
Within the formula builder you will see LASTYEAR as an available option. This will reference the balance of an account at the end of the last financial year.
This prediction will need to:
Again be set against the balance sheet account
VAT rate set to 0%
Have an Output Frequency set to Annually
Have the output on the 1st, and January (9 months and 1 day after the financial year end)
Set to be a Same day payment
The formula will then be 0-, to give a negative figure, followed by the balance sheet account in question and LASTYEAR, to take that balance sheet account balance at the end of the last financial year.