Can I use CATO?

CATO – With the advent of digital technology for quite a while now, it has become desirable for banks, financial institutions, corporates or even individuals to upload files and returns online, keeping secured transactions and compliance. This saves time and resource investment and has become mandatory too. HMRC has introduced a simple online accounts filing tool in place of downloading a Corporate Tax (CT) form called Company Accounts and Tax Online (CATO), which can be accessed with a company’s unique credentials, which can be directly passed on to their accountant, who will then file the returns with ease.

CATO to file the returns with HMRC:

Although this is a boon for most organizations, there are restrictions and rules that companies have to comply with before being able to use this service. In order to understand better, let us briefly look at the requirements of CT online filing before we go into the criteria for companies who cannot use CATO (HMRC’s free filing service), for a better understanding:

From 1st April 2011, companies were required to file their corporate tax returns electronically for all AP’s that ended on or after 1st April 2010, using HMRC CT Online Services.

Companies and Agents had to register themselves; the accounting figures and their related computations had to be mandatorily filed in iXBRL format.

This was also applicable to overseas companies resident in the UK and any non-resident company trading in the UK through a permanent establishment.

Any electronic return had to include all the following:

Form CT600

All supplementary pages that were required

The accounts and computations

Any required elections

The only exemptions in this official tax computation rule were:

Companies run entirely by individuals practicing members of a religious society need not file returns.

Insolvent companies with a formal administration /winding up procedure did not have to file.

Unincorporated charities, clubs, and societies could file their accounts in either iXBRL or PDF formats.

Accounts are accepted from smaller charities in PDF format.

No computation is required where the CT600E (Charities and Community Amateur Sports Clubs (CASCs)) supplementary page of the return is completed and confirms that all income and gains of the charity are exempt from tax.

So which are the companies that cannot use CATO? What are the terms and conditions currently associated with using the service? Here is a list of the rules for your easy reference:

The company cannot use the free CATO service if any one of the following applies:

Company accounts require an audit or have been audited
Company turnover is above £632,000 per year
Charity turnover is above £6.5 million per year
The company must pay its Corporation Tax in installments
The company is part of a group
The company is not registered in the UK
The company is in liquidation or receivership
The company is an insurance company, excluding independent insurance brokers
The company is an investment company
The company is a credit union
The company is a commercial property management company

The accounting period for the return for Corporation Tax is covered by more than one set of statutory accounts.
The company needs to claim a repayment of a loan to a participator (e.g., a director’s loan), more than 9 months after the end of the accounting period.

Now that you have all the necessary information on the prerequisites to qualify for using CATO, maybe it’s time to evaluate if you need help with further tax filing procedures. You can contact us for any queries and conversations about your financial statement conversion on enquiry@datatracks.co.uk

FAQ for CATO Online Filing

1. What is CATO?
CATO, or Company Accounts and Tax Online, is an online tool introduced by HMRC for filing corporate tax returns. It allows companies to upload files and returns securely, saving time and resources.

2. Who can use CATO to file returns with HMRC?
Companies, financial institutions, and individuals who meet certain criteria can use CATO. It requires electronic filing of corporate tax returns using HMRC CT Online Services, starting from accounting periods ending on or after 1st April 2010.

3. What are the requirements for using CATO?
To use CATO, companies must:
Register with HMRC.
File accounting figures and computations in iXBRL format.
Include Form CT600, all supplementary pages, accounts, and computations in the return.

4. Who is exempt from filing returns using CATO?
Exemptions include:
Companies run entirely by individuals who are practicing members of a religious society.
Insolvent companies under formal administration or winding up procedures.
Unincorporated charities, clubs, and societies (they can file in iXBRL or PDF formats).
Smaller charities can file accounts in PDF format without computations.

5. Which companies cannot use the free CATO service?
The free CATO service is not available if any of the following apply:

Company accounts require an audit or have been audited.
Company turnover exceeds £632,000 per year.
Charity turnover exceeds £6.5 million per year.
The company must pay Corporation Tax in installments.
The company is part of a group.
The company is not registered in the UK.
The company is in liquidation or receivership.
The company is an insurance company (excluding independent insurance brokers).
The company is an investment company.
The company is a credit union.
The company is a commercial property management company.
The accounting period covers more than one set of statutory accounts.
The company needs to claim a repayment of a loan to a participator more than 9 months after the end of the accounting period.

6. What are the benefits of using CATO?
CATO simplifies the tax filing process, ensuring compliance and secure transactions. It saves time and resources by allowing direct filing of returns online with the use of a company’s unique credentials.

7. How do I get started with CATO?
To get started, register your company with HMRC’s CT Online Services. Ensure that your accounting figures and computations are prepared in iXBRL format before filing.

8. Can overseas companies use CATO?
Yes, overseas companies resident in the UK and non-resident companies trading in the UK through a permanent establishment must file returns electronically using CATO.

9. What should be included in an electronic return filed via CATO?
An electronic return must include:
Form CT600
All required supplementary pages
The accounts and computations
Any required elections

10. Who can I contact for help with tax filing procedures using CATO?
For assistance with tax filing procedures and financial statement conversion, you can contact DataTracks at enquiry@datatracks.co.uk.

By understanding these FAQs, you can better navigate the requirements and benefits of using HMRC’s CATO for filing corporate tax returns.