Non-corporate distribution rate

[adomast]

A company has an accounting period for the year ended 31 December 2004. Its basic profits are £9,000. CT taxed Nil. No distribution made.

And for accounting period ended 31 December 2005 has basic profits of £9,000 and it has paid a dividend of £18,000 on 31 December 2005 to private shareholder.

Does the company has to apply the non-corporate distribution rate to profits paid out from year 2004 (£9,000)?
Does it have to correct the revenue reporting for 2004?

Respectfully,
Adam

[Lambs]

A,

NCDs are distribution-dependent and are capped by reference to profits made in the year, 'though the 'unfranked' distributions may be carried forwards.

The distributions it made in respect of 2004, were paid in 2005. Therefore, for NCD rules, they are matched with 2005 profits. You are thinking too much like an accountant!

So the answers are, No, and No. It would appear that you will have to apply NCD rates to £9k in 2005, carrying forwards 'unfranked' NCDs of £9k.

NCD rules: soon to be defunct. Just when I was beginning to get to grips with them...

Regards,

Lambs