CTSA: quarterly instalments: intra-group surrender: examples
- Company A and Company B are members of the same group for the purposes of CTA10/S963.
- They both have an accounting period from 1 August 2009 to 31 July 2010.
- Both companies are believed to be liable to make quarterly instalment payments.
They make payments as follows:
|Company A||Company B|
|14 February 2010||£10,000||£150,000|
|14 May 2010||£8,000||£160,000|
|14 August 2010||£5,000||£170,000|
|14 November 2010||£1,000||£192,000|
|Total Paid||* * *|
|* * *|
The total payments at 14 November 2010 reflect:
- estimated CT liabilities of £40,000 for Company A,
- estimated CT liabilities £1.12m for Company B.
On 28 June 2011 both companies file their returns showing:
- Company A’s profits are below the upper limit, so it was not liable to make quarterly instalment payments. Its tax liability is computed at £34,420.
- Company B’s liability is £1.2m.
The quarterly instalment payments that Company B should have made, based on a total liability of £1.2m are four instalments of £300,000. So Company B’s cumulative underpayment of instalments is:
|Cumulative amount due||Cumulative amount paid||Cumulative underpayment|
- Company A and Company B give joint notice of surrender. (No notice under CTA10/S963 (6C) is needed because Company A’s claim relates to all the tax it has paid.)
- The instalment tax paid by Company A (£24,000) is treated as paid by Company B on the dates on which Company A paid it.
- Company A is treated as if the tax had been repaid to it on those dates.
It follows that:
- Company A is treated as not having made any quarterly instalment payments,
- Company A’s tax liability becomes due on 1 May 2011, the normal CT due date,
- Company B needs to pay a further £504,000 without delay, to bring its total instalment payments (including the refund surrendered by Company A) up to £1,200,000.
- Company C and Company D are members of the same group for the purposes of CTA10/S963.
- They both have an accounting period 1 August 2009 to 31 July 2010.
- Both are liable to make quarterly instalment payments.
They estimate their liabilities and pay tax as follows:
|Company C||Company D|
|Estimated liability payable in instalments||Payments made||Estimated liability payable in instalments||Payments made|
|Total payments so far||£16m||£8m|
- On 1 July 2010 they revise their estimates of the liabilities to be paid by instalments to £28m and £20m respectively.
- On this basis, the total amounts of the quarterly instalment payments due to date are £14m and £10m.
Company C can make a repayment claim of £2m under Regulation 6 (see CTM92650) because no tax is now believed to have become payable in instalments.
- Company C claims repayment of £2m, which is surrendered to Company D.
- Company C gives notice under CTA10/S963 (6C) that the £2m is to be treated as:
- £1m paid on 14 February,
- £1m paid on 14 May,
- Company C is treated as if those amounts had been repaid to it on those dates and Company D is treated as having paid those amounts on those dates.