Revenue Note for Guidance

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Revenue Note for Guidance

27 Basis of, and periods for, assessment

Summary

This section provides that a company is to be assessed and charged to corporation tax for every accounting period on all its profits arising in that period. The section also contains rules for determining when an accounting period begins and ends for the purposes of corporation tax.

Details

Assessment and charge to corporation tax

(1) Except as otherwise provided by the Corporation Tax Acts, a company is assessed and charged to corporation tax for every accounting period on all profits arising in that period whether or not they are received in, or remitted to, the State. The exceptions include the exclusion from corporation tax of profits not attributable to an Irish branch or agency of a non-resident company (section 25(2)), the corporation tax exemptions contained in Chapters 2 and 3 of Part 7, the exemptions imported into corporation tax from income tax by virtue of section 76(6) (most of these are set out in Chapter 3 of Part 7 and are now expressed as applying for the purposes of the Tax Acts) and the exemption for profits arising to a life assurance company from investments and deposits of so much of its life assurance fund and separate annuity fund as is attributable to its pension business (section 717(1)).

Rules relating to start/end of an accounting period

(2) An accounting period begins —

  • when a company comes within the charge to corporation tax, or
  • when an accounting period ends without the company then ceasing to be within the charge to corporation tax.

(3) An accounting period ends on the earliest of the following —

  • the expiration of 12 months from the beginning of the accounting period,
  • the ending of a period (not exceeding 12 months) for which a company makes up its accounts or, if there is a period for which it does not make up accounts, the ending of that period,
  • the company beginning or ceasing to trade or to be within the charge to corporation tax in respect of its trade or (if more than one) of all its trades,
  • the company beginning or ceasing to be resident in the State, and
  • the company ceasing to be within the charge to corporation tax.

Starting business: coming within the charge to tax

(4) A resident company if not otherwise within the charge to corporation tax is treated as coming within that charge at the time it commences to carry on business.

Determination of accounting period

(5) The Revenue Commissioners are authorised to determine which accounting date is to apply where a company carrying on more than one trade makes up accounts for those trades to different dates and does not make up accounts for the whole of its activities.

Dormant companies

(6) Where a dormant company makes a chargeable gain or incurs an allowable loss, an accounting period is treated as beginning at the time of the gain or loss and the gain or loss is treated as accruing in that accounting period. This accounting period will end according to the rules set out earlier. Allowable capital losses incurred in the years 1974–75 or 1975–76 (that is, allowable losses for the purposes of capital gains tax) may be carried forward under paragraph 19 of Schedule 32 and treated as allowable losses incurred by the company while within the charge to corporation tax.

Companies winding up

(7)(a) An accounting period ends and a new one begins when a company commences to be wound up. Thereafter an accounting period ends on the expiration of 12 months from the beginning of the winding up or at the completion of the winding up. These rules apply to the exclusion of the rules set out above concerning the start/end of accounting periods.

(7)(b) The date a winding up commences is—

  • the date when the resolution for the winding up of the company is passed by the company,
  • the date of the presentation of the winding up petition to the court if no winding up resolution has previously been passed by the company and provided a winding up order is made on the petition, or
  • the date of the doing of any other act for a like purpose in the case of a winding up otherwise than under the Companies Act, 2014.

Uncertain accounting periods

(8) Where, because a company has failed to make returns or supply accounts or other information, it is not possible to determine an accounting period in accordance with the above rules, the inspector is authorised to make an assessment for such period not exceeding 12 months as appears to him/her appropriate. The period so chosen by the inspector is treated as an accounting period of the company unless —

  • the inspector on obtaining further facts sees fit to revise it, or
  • the company on appeal against the assessment in relation to some other matter discloses the true accounting periods.

Where on appeal the company shows the true accounting periods, the assessment for the accounting period chosen by the inspector still has effect for the period to which it relates as if it were an assessment or assessments for the true accounting periods. Further assessments can then be made for such other period or periods constituting the true accounting periods which would have been allowed to have been made at the time the original assessment was made.

Relevant Date: Finance Act 2021