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HMRC internal manual

Corporate Intangibles Research and Development Manual

R&D tax relief: SME scheme: payable tax credit - recovery of


Where it is found that a payable tax credit ought not to have been paid an assessment should be raised to recover the amount overpaid.

Provisions in FA98/SCH18/PARA52 (2)(ba) and (5)(ab) (introduced by FA00/SCH21/PARA3) allow the amount overpaid to be assessed.

The assessment is treated as an assessment of the accounting period for which the tax credit was paid. The assessment carries interest under TMA70/S87A from the date the payment being recovered was made until payment.

Paragraph 52 assessments are made under Part 10 Chapter 8 S979 CTA 2009.

The payable tax credit is not a profit so a claim to losses under ICTA88/S393A cannot be set against the assessment. The payable tax credit is not an income from a transaction so Part 10 Chapter 8 losses cannot be set against the assessment either.

HMRC cannot make these assessments in COTAX, but must use a CT10 (Z) set. The particulars to enter on the assessment are ‘Paragraph 52 Schedule 18 Finance Act 1998’. Show the tax as payable now.

Assessments under Paragraph 52 are accounted for as a Tax on Company Assessed charge on ETMP (SAFE). Late Payment interest is chargeable against these assessments.

Send the appropriate new charge stencil to the SAFE nominee in your office.

Time limit

FA98/SCH18/PARA53 prescribes the time limits for making assessments under Paragraph 52. The time limit is the latest of:

  • four years after the end of the accounting period to which it relates,
  • the end of the accounting period following that in which the amount being recovered was paid,
  • three months after the completion of an enquiry into a relevant company tax return.

In cases involving fraudulent or negligent conduct, the time limit is extended to 20 years after the end of the accounting period.