COM110075 - Penalties: late delivery of returns: Tax unpaid
Tax unpaid
For tax-related penalty purposes, ‘tax unpaid’ is defined as follows.
For CTSA return periods
It is defined by Paragraph (Para) 18(3) & (4) Schedule 18 Finance Act (FA) 1998 as the amount of tax payable by the company for the Accounting Period (AP) for which the return was required remaining unpaid on the date when the liability to the penalty arises under Para 18(1) Schedule 18 FA 1998.
Exceptionally, for CTSA return periods, if the filing date for the return is more than 18 months after the end of the AP, the penalty is based on the tax unpaid at that later date. No such extension applies to CT Pay and File return periods.
In arriving at the amount of tax payable, you do not allow any deferred relief due under the provisions of Section 458 (S458) Corporation Tax Act (CTA) 2010, relief in respect of repayment of loan.
S963 CTA 2010 (formerly S102 FA 1989) allows the surrender of a tax refund from one group company to another. To calculate tax unpaid for the purpose of Para 18(3) Schedule 18 FA 1998, the recipient company is treated as having paid the amount of the refund on the day the two companies jointly gave notice to the caseworker under S963, not as having paid the tax on the date when the tax was paid by the surrendering company.
If the notice of surrender is given after the 18 -month point, tax-related penalties must be based on the tax unpaid when the liability to the penalty arises. For more information about S963 surrenders, see COM120000 onwards.
For CT Pay and File return periods
It is defined by Section 94(7) (S94(7)) Taxes Management Act (TMA) 1970 as the CT chargeable on the profits of the return period that remains unpaid 18 months after the end of the return period less any Income Tax that is to be set-off under S7(2) or 11(3) Income and Corporation Taxes Act (ICTA) 1988.
In this context, CT chargeable means the final figure, after deduction of group relief and carry-backs of trade losses, surplus ACT and so on, from later APs.
The sole exception to this rule is in S94(8) TMA 1970, namely that you do not deduct ACT carried back from a subsequent AP that ends more than two years after the end of the AP for which the penalty is due.
S963 Corporation Tax Act (CTA) 2010 allows the surrender of a tax refund from one group company to another. To calculate tax unpaid for the purpose of S94(6) TMA 1970, the recipient company is treated as having paid the amount of the refund on the day the two companies jointly gave notice to the caseworker under S963, not as having paid the tax on the date when the tax was paid by the surrendering company.
If the notice of surrender is given after the 18 -month point, tax-related penalties must be based on the tax unpaid at the 18 -month point. For more information about S963 surrenders, see COM120000 onwards.