Guidance

Corporation Tax: assessments (CT220 Notes)

Published 12 August 2016

1. Overview

These notes will help you to understand your company’s ‘Corporation Tax Assessment’ and tell you what to do if you disagree with any of the figures shown.

If you need more information, please contact your HMRC office stating the reference and assessment number shown at the top of the assessment.

2. What your Corporation Tax Assessment shows

The assessment shows your company’s Corporation Tax position for the accounting period (AP). This is usually based on the information contained in your company’s Corporation Tax Return or on later amendments. We use estimated figures if you’ve not sent us enough information to make an accurate assessment. In this case there is a letter E in front of the figure.

3. What to do with your company’s assessment

You should decide whether you agree with the assessment. If the company has a professional adviser or agent, you should make sure they see the assessment at once. We’ll have sent them a copy if you’ve authorised us to do so.

3.1 If you think the assessment is correct

If there’s no tax to pay, all you need do is keep the assessment in case you need to refer to it in future.

If there is tax to pay we attach a payslip to the assessment showing how much. The notes on the back of the payslip tell you how to make your payment.

Interest is charged on all late payments.

3.2 If you think the assessment is wrong

If you think the assessment is wrong you should appeal at once. For more information about this see the Appeals section.

Even if you appeal you must pay the tax unless you also apply to postpone payment. For more information about this see the Appeals section.

4. Claims

The assessment should reflect any claims that your company has already made.

4.1 Capital allowances

Your company might have claimed allowances for certain capital expenditure on:

• machinery or plant
• the construction of industrial buildings, including hotels and commercial buildings in Enterprise Zones
• agricultural buildings
• the working of a mine, oil-well (and such like)
• the purchase of patent rights
• scientific research

The claim had to be made in a Corporation Tax return or an amended return by the later of the date:

• 2 years from the end of the company’s AP
• when the assessment (or determination of trading losses or group relief) becomes final, provided this isn’t later than 6 years from the end of the company’s AP

Your company could amend or withdraw a claim in an amended return within the same time limits.

4.2 Trading losses

Your company may have claimed that a trading loss in the AP is used to reduce the profits of that AP or of APs that fell wholly within the previous year. For APs that ended before 2 July 1997, or where the company has permanently ceased, trading losses could be carried back for 3 years. The claim had to be made within 2 years of the end of the AP during which the loss was incurred.

4.3 Group relief

Subject to certain conditions, your company may have claimed as relief, trading losses and certain other items eligible for relief from another company that is within the same group for the same AP. Similar relief might have been claimed if your company is a member of a consortium. The claim had to be made in a Corporation Tax Return or an amended return, by the later of the date:

• 2 years from the end of the claimant company’s AP
• when the assessment became final, provided this is not later than 6 years from the end of the company’s AP

The company could amend or withdraw a claim in an amended return within the same time limits.

4.4 Advance Corporation Tax

Where your company paid (and hasn’t been repaid) Advance Corporation Tax (ACT), that ACT is set against the Corporation Tax charged on your company’s profits for that AP.

The amount of ACT which may be set off is limited to the amount of ACT that would have been payable in respect of a distribution made at the end of the AP of an amount which, together with the ACT in respect of it, is equal to the profits charged to Corporation Tax for the AP.

Where the company has surplus ACT, it may have claimed to set that surplus against the Corporation Tax charged for APs up to 6 years earlier.

The claim had to be made within 2 years of the end of the AP in which the surplus arose.

5. What to do next

5.1 Payment of tax

Corporation Tax is due 9 months and one day after the end of the AP. Interest is charged on all payments made after this due date. If you’ve not paid the tax that is outstanding you should do so without delay. The notes on the back of the assessment tell you how to make your payment.

5.2 Interest charges on late payments

We charge interest if you don’t pay your company’s tax on time. Interest is charged from the due date until the date on which you pay.

The due date for Corporation Tax is always 9 months and one day after the end of the accounting period that is shown in the assessment.

If you’ve paid more tax than is due according to your company’s assessment, we’ll normally repay the overpaid tax to you automatically.

We’ll pay interest on any repayment from the date of payment (or the due date if that is later) until the date of repayment.

If you’ve already paid interest on any part of the tax which is repaid, we’ll also repay that interest automatically.

Ask your Accounts Office if you want to know more about the interest that we’ve charged on late payments or the interest that we pay on repayments.

6. Appeals

If you don’t agree with the amount of the assessment, you or your company’s adviser may appeal against it by writing to the officer whose address is shown on the notice. For any appeal we’ll need to know:

• the reference and the accounting period printed at the top of the assessment
• why you think the figures are wrong
• the correct figures for any amount you think should be altered

The appeal must be made within 30 days from the date on which the assessment was issued. If you’ve not already done so, you should deliver your company’s completed Corporation Tax Return together with the appropriate accounts and computations.

Penalties are charged where a return is delivered late, even if there’s no tax to pay.

If you’re appealing and you think the amount of tax charged is excessive, you can also ask to postpone payment of the excess.

Tell us:

• why you think the tax charged is excessive and by how much
• the amount you propose to pay before your appeal is settled

We expect you to make a fair estimate of these amounts. We’ll let you know whether we agree your application.

Any tax that hasn’t been postponed should be paid straightaway. Any amount that’s postponed but is found to be payable will carry interest from the normal due date(s).

Once you’ve sent the appeal to us we may have further discussions with you to try and resolve the dispute. Most disputes are resolved in this way. You can also ask us to review the case, or we may offer you a review.

You can ask for your appeal to be heard by an independent tribunal. If you’ve accepted our offer of a review you can only do this if the review has ended.

If you’ve asked for a review and the decision maker has written to you with our view of the matter, you can only ask for the appeal to be heard by the tribunal if the review has ended.

If you disagree with the decision reached by the review officer you can ask for your appeal to be heard by the tribunal.

You need to do this within 30 days of our conclusion of review letter (or the letter telling you that the review is treated as upholding the original decision). To do this, write to the tribunal or complete the tribunal appeal form.

You can only ask for your appeal to be considered by the tribunal if you’ve already sent an appeal to HMRC.