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HMRC internal manual

Company Taxation Manual

CTSA: the filing obligation: estimated figures in returns: ICAEW Technical Release 12/92

Guidance note: pay and file: exposure to penalties where returns contain estimated figures

  1. During the course of representations by the Faculty of Taxation of the Institute of Chartered Accountants in England and Wales on CTPF, the Faculty observed that the notes at the head of page 3 of the CT return form CT200 encourage taxpayers to estimate figures where necessary.
  2. The Tax Faculty asked the Inland Revenue to state the Board’s policy in relation to the charging of penalties in circumstances when a timely return is filed but one or more figures are estimated.
  3. The Inland Revenue has stated that the company has an obligation to deliver a return on time and that it should be complete and correct to the best of the company’s knowledge and belief. It is for the company to take all reasonable steps to file a complete return by the due date but, as recognised in paragraph 4.6 of ‘A First Guide to CT Pay and File’ (February 1991), there may be exceptional circumstances in which the company is unable to produce final figures. In that case the company ought to make an estimate to the best of its ability, tell the Inspector that the figure is estimated and explain the basis of the estimate. A return form completed in this way to the best of the signatory’s knowledge and belief and filed on or before the due date will then be treated as having been completed on time and will satisfy the obligation under TMA70/S11 and the company would normally not be liable to a late filing penalty under TMA70/S94.
  4. The Inland Revenue pointed out that a return which was submitted on time but which was clearly incomplete, because entries were missing, would be the subject of late filing penalties.
  5. Where the company subsequently becomes aware that an estimated figure is no longer the ‘best estimate’ or that it can be replaced by an accurate figure, this information should be sent to the Inspector without unreasonable delay. The Revenue said that provided the final figures are sent to the Inspector as soon as they are available TMA70/S97 would ensure that the company would not be liable to a TMA70/S96 penalty unless fraud or negligence were involved.
  6. Where a company supplies estimated figures which prove to be unreasonable and therefore not the company’s ‘best estimate’, this will not invalidate the return for the purposes of Section 11, but it may render the company liable to penalties under TMA70/S96 for submitting an incorrect return. If a penalty were imposed in such circumstances, it would be subject to the normal appeal provisions.
  7. The company may be given further time in which to submit its return under TMA70/S118 (2), but this must be agreed with the Inspector and the company should not assume beforehand that such further time will be granted.