CTM92740 - CTSA: quarterly instalments: intra-group surrender: legislation

SI1998/3175/REG9 (as amended by SI1999/1929/REG3) amends CTA10/S963 so as to enable a refund of tax that is paid under the instalment arrangements to be surrendered to fellow group members with the benefit of the actual date of payment.

The effect is to enable a group of companies to neutralise the debit and credit interest rate differential that it would otherwise suffer when too much instalment tax had been paid by one company and not enough by another or others.

It only applies when a tax refund is due to be made to the surrendering company. The refund may be due either under Regulation 6 (CTM92650), or TMA70/S59D (2).

It follows that:

  • payments made during the quarterly instalment payment period may retrospectively be allocated between group members to mitigate the interest position of the group, beyond that limited circumstance,
  • REG9 only applies in relation to CT paid on account of the surrendering company’s own liability,
  • it does not permit a group to make a global payment in the name of a dormant company or one that will have no CT liability, and then reallocate it between group members retrospectively.

Under REG9 the surrendering company must give notice to HMRC, at the time when the joint surrender notice is given, specifying the payment(s) out of which the refund is to be treated as made (CTA10/S963 (6C)).

If the surrendering company specifies more tax than is repayable, this must be notified. The surrendering company then has 30 days in which to bring its specification into line with the amount of the repayment due. If it fails to do so within that time, the repayment can be made as if no notice of surrender had been given (CTA10/S963 (6D) and (6E)).