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Tax accounting software for a private limited company in the UK includes the prime elements of using accounting software to produce the required quarterly vat returns and annual net profit with the tax software automating the calculation of the tax liability and producing an automated corporation tax return.
Company Accounting Software.
All types of business accounting software produce a net taxable profit being the difference between sales income received and purchase expenses. To become a complete accounting package there should also be a facility within the program to calculate tax allowances.
Since tax allowances change then not all accounting packages cope well with this aspect as either it is ignored and any claims for capital allowances need to be input manually which often requires knowledge of the tax system. In any event many systems require the current year tax allowances to be input.
There are packages available where the tax accounting is automated by a package that includes all the current financial year tax rules. Such tax accounting software either has to include an upgrade service to incorporate the different tax rules that apply each year or a new package has to be purchased for each new financial year.
Every quality tax accounting software package should calculate the corporation tax liability which is one of the most significant costs of every business. Where business accounting software does not produce an automated calculation of the tax liability then the tax due has to be entered manually.
Manually entering the tax liability is a function frequently best dealt with by an accountant since the transaction also involves the final completion of the company accounts and potentially journal entries to account for distributions from the after tax profit and retained profits.
Vat Tax Return Software.
It would be unusual to find a company accounts package that did not automatically generate the quarterly figures for the vat return since almost all companies are vat registered.
Vat registration is not a legal requirement for a limited company however as the vat threshold is based upon a fairly low sales turnover which for 2008 was 67,000 pounds; most companies sales turnover exceeds this threshold at which point vat registration is mandatory.
One important aspect a tax accounting software program should provide is an audit trail of transactions that make up the figures reported in the vat return.
Tax Software and CT600 Corporation Tax Return.
In the UK a private limited company has to complete a corporation tax return each financial year. Known as the CT600 companies with a sales turnover which qualifies as a small company can complete the CT600 short return.
Completing the CT600 short corporation tax return is a specialist accountancy area which few non accountants are familiar with. It is not necessarily a difficult task for an accountant but with over 100 paragraphs of notes and explanations a daunting task for many non accountants.
Few accounting software packages have the necessary tax software encrypted within the packages to produce the corporation tax return although in recent years the major companies have tended towards producing online feeds.
Using the right tax software the CT600 corporation tax return can be completed automatically.
To do so the company accounts package has to include all the relevant tax rules and rates applicable for fixed assets and the calculation of the tax liability. Those tax rules have a strong tendency to be changed every year. Suitable tax software is essential to perform this annual process.
The tax accounting takes the tax rates and rules automating the work of a tax accountant to produce the tax liability. The term tax software indicates automation based upon data input which the computer package then processes to produce the desired output. Company tax software produces the tax requirements of the company including both the corporation tax liability and completion of the tax return.
