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HMRC internal manual

Company Taxation Manual

Corporation Tax self-assessment (CTSA): the payment obligation: amounts payable/repayable

In most cases a company will have paid any CT due for an accounting period before it delivers its company tax return. 

The self assessment fixes the liability for an accounting period.  In some cases insufficient CT will have been paid and collection activity will be required.

Under CTSA the tax charged in a Revenue determination is collectible as if it were charged in a self assessment (FA98/SCH18/PARA39) unless and until the determination is superseded by a self assessment, see CTM95370.

If the Revenue determination is the subject of recovery proceedings at that time, they may be continued as if they were proceedings for the amount charged by the self assessment but unpaid (FA98/SCH18/PARA40).

In some cases the self assessment will show too much CT has been paid. Under TMA1970/S59D (2) tax is repayable if amounts paid exceed the tax payable as stated in the company’s relevant tax return.  Subsection (3) states the tax payable is the amount computed in accordance with FA98/SCH18/PARA8.  Under ‘process now, check later’ this will usually lead to an immediate repayment of the excess tax paid.

FA98/SCH18/PARA 8 sets out the method for arriving at the self assessment that must be included in a company’s return.  When we enquire into a return, we are primarily trying to establish the correct sum assessable.  Therefore, if we have valid grounds for believing that the tax payable is in question and in our view will not result in excess tax paid under TMA70/S59D (2) (or will result in a reduced excess), we believe we have the right to withhold repayment of so much of the excess that would otherwise be repaid. 

Sometimes the decision to withhold repayment on this basis will be made whilst you are considering the return and before you have opened an enquiry. A common example is where: you are aware of potential avoidance by a company (or another company surrendering group relief to a company); may not yet want to launch into the enquiry while you gather information; and want to withhold the repayment.  In those cases you should ensure an enquiry is opened without undue delay.

The company may still have the option to claim a repayment under TMA70/S59DA, or CT (Instalment Payment) Regs 1998/3175/REG6.