Skip to content

ACCA Applied Skills · Taxation (UK) · The comprehensive computation of corporation tax liability

Harrow Ltd has a corporation tax liability of £60,000 for a nine-month accounting period. The tax was due on 1 July 2026 but was paid on 1 October 2026, exactly three months late. Using the assumed interest rate on underpaid tax in the tax tables, what is the interest charge?

The interest is £1,275. Late-paid corporation tax bears interest at the 8.50% underpaid rate from the due date to payment. Three months late on £60,000 gives £60,000 × 8.5% × 3/12 = £1,275. Using a full year would wrongly give £5,100.

  1. A£1,275Correct
  2. B£5,100
  3. C£1,312
  4. D£1,050

Explanation

Interest is charged on underpaid tax at 8.50% a year for the period from the due date to the payment date. £60,000 × 8.5% × 3/12 = £1,275. £5,100 is the full-year interest, with the period ignored. £1,312 uses the official rate of 3.75% for the full year. £1,050 uses the 3.50% overpaid rate for 6 months.

Did you get it right without looking?

One question tells you little. A timed set on The comprehensive computation of corporation tax liability shows your real accuracy, how long you take and where you lose marks.

Practise The comprehensive computation of corporation tax liabilityFree diagnostic mock

More The comprehensive computation of corporation tax liability questions