Loan relationships: special types of security: funding bonds: paying the funding bonds to HMRC
How to send the retained funding bonds into HMRC
Once a company has retained part of a funding bond issue for the tax deducted from the interest paid by the funding bond issue it then has to pay the tax deducted over to HMRC.
The company should pay the tax deducted using its CT61 return for the quarter that the interest was paid. The CT61 should be completed using the value of the funding bond at the date of issue as the amount of interest paid by funding bond. This may not be the same as the face value of the funding bond.
The company may decide to pay the tax deducted with a monetary payment in which case the CT61 can be sent to the Accounts Office as usual, but see below about the information to be included in a covering letter. However, if the company decides to pay the tax deducted to HMRC using the funding bonds it has retained, then it should ensure that the funding bonds used to pay the tax deducted are issued to HMRC’s nominee company RN Ltd (company registration number 279190). For reference the registered office of RN Ltd is:
C/o HMRC Finance - Trust Statement Team, 9t h Floor, Alexander House, 21 Victoria Avenue, Southend on Sea, Essex SS99 1AA
The funding bonds should then be sent into the Accounts Office as detailed below.
Whether or not the tax deducted from the funding bond is paid using a monetary payment or by submitting the funding bonds retained, the CT61 should be sent to the Accounts Office with a covering letter providing the following:
- The amount of interest paid by funding bond (which should be the value at issue) and included on the CT61; and
- If different the face value of the funding bond at issue - this will enable HMRC to consider the valuation of the funding bonds;
- An explanation of the method and the factors taken into account when valuing the funding bond at issue;
- The amount of tax deducted from the interest paid by funding bond;
- A copy of the terms and conditions of the funding bonds; and
- If the tax deducted is being paid by funding bonds the relevant funding bonds issued to RN Ltd.
The Accounts Office will send the original funding bonds along with the terms and conditions to the Funding Bond Section. The Funding Bond Section will check that the funding bond has been validly issued and will send to the office responsible for the company accounts the covering letter, a copy of the terms and conditions and a copy of the funding bond so that a valuation can be arranged.