Repayments / reallocations: non automatic repayments: early repayment - responsible office
A company that pays CT and later believes that it has paid too much can ask for a repayment of the excess under S59DA TMA 1970. Handling these requests may be complex, and full instructions are in the Company Taxation Manual, at CTM92090.
Be sure that the company has not sent in an amendment that you can deal with in the usual way. See COM23010 for more information about dealing with amended returns.
For quarterly instalment payment (QIP) companies, requests are made under Regulation 6 of the Quarterly Instalment Regulations (etc). See Company Taxation Manual CTM92650. Unlike S59DA, requests under Regulation 6 can be made at any time before the liability is finally established.
Companies not in an open group payment period for a Group Payment Arrangement
Requests can only be made after:
- the date when any interest would be payable on tax under ICTA88 / S826 (S59DA TMA 1970 (2) refers). For most types of tax this is the normal due date, but there are later dates for S455 CTA 2010 tax, tax credits, Land Remediation Tax Credits, and R & D Tax Credits. See CTSA material dates (Word 112kb) or
- a discovery assessment has been raised.
The company must give notice of the request to the caseworker stating:
- the amount that it considers should be repaid
- the grounds for believing that the amount paid exceeds the company’s probable liability to CT.
You consider the request for repayment on its merits as follows.
- If the company has not received a notice to deliver and not delivered a company tax return you should allow repayment when a non-QIP company that made a payment before the normal due date (Word 49kb) for the AP and, also before the due date, seeks repayment of all or part of that amount.
- If the company has made a return which is not under enquiry, you need to establish that what you have received is not an amendment to the return. If it is not, establish why the company cannot deal with the matter by amending the return or otherwise making a proper claim to relief.
- If the company has made a return which is under enquiry, you can still repay even if the return is under enquiry. You should obtain a written request for repayment from the company and you should warn the company that if it has to repay some of the repayment, interest may also be charged.
Companies in an open group payment period under a Group Payment Arrangement
A claim for an early repayment is dealt with by the Group Payment Team at the Accounts Office in Cumbernauld. If the Group Payment Arrangement has closed for a given AP then you deal with the company according to whether it is a QIP or non-QIP case.
Decisions on applications
S59DA(4) TMA 1970
You treat repayment applications made in conjunction with an appeal against a charge raised by HM Revenue & Customs as you would postponement applications made under S55 TMA 1970. See Assessment Procedures (AP) Manual at AP3328.
If you cannot reach agreement with the company, the company may refer the application to the Tribunal for determination.
Interaction of S59DA(6) TMA 1970 / S55(3) or (4) TMA 1970
Payments made after HM Revenue & Customs has raised a charge, but before it becomes final, can normally only be repaid when a company successfully applies for a postponement or further postponement under S55 TMA 1970.
S59DA(6) TMA 1970
A company that has made a payment both before and after HM Revenue & Customs has raised a charge might want to apply for a repayment under S59DA TMA 1970 and make a postponement application under S55 TMA 1970.
In practice, you should regard any application made under Section 59DA at a time when a HM Revenue & Customs charge is under appeal, as a postponement application. Similarly, you should regard any postponement application that is intended to lead to a repayment as implying any necessary application under Section 59DA.
COTAX normally automatically calculates repayment interest due on repayments of tax and credit interest due where applicable and automatically adds them to the repayment.
It does not add repayment interest or credit interest to any repayment made before the normal due date has passed and there is a charge on the record.
Quarterly instalment payers
A company may apply under Regulation 6, for repayment of the excess when it has made instalment payments and subsequently has grounds for believing that, by reason of a change in its circumstances:
- its total liability for the AP is likely to be less than previously calculated
- the total amount it has paid is greater than the amount it has, on its latest estimate, so far become due to pay.
The company must specify in the claim the amount it thinks is repayable and the grounds for that belief.
This provision can apply at any time after the payment of an instalment and before the liability of the company is finally established. This includes a case where the return is under enquiry. If there is an assessment or an amendment under appeal, the company can apply to the Tribunal to determine the amount repayable.
A company can combine a claim or application under this regulation with a postponement application. It is heard and determined in the same way as an appeal.
The caseworker allows a Regulation 6 repayment unless dissatisfied with the grounds given by the company, or the application will produce a repayment of S455 CTA 2010 tax if S458(5) CTA 2010 operates so as to defer relief under S458 CTA 2010.
For more information about dealing with Regulation 6 claims see the Company Taxation Manual (CTM) at CTM92650.
Repayment claimed before liability finally established
If the normal due date has not been reached, you can allow the claim and use function DIRR (Direct Repayment) to repay the amount claimed. COTAX does not add any interest to the repayment.
If the normal due date has been reached and there is a charge to tax on the company record, COTAX calculates and repays any credit interest due automatically. Therefore, if you are responding to a claim after that point, you cannot use function DIRR to make the repayment.
In these circumstances you should:
- set the CDII in function MAPS
- use the ‘reallocate specific amount’ option in function REOD (Reallocate Out Of COTAX)
- send a form CT251 to the CT Unit Cumbernauld asking them to repay, including the amount of repayment interest to be added.
- COM120100 for guidance on completing a CT251
- COM125061 for a list of forms relevant to this subject
- COM125062 for a list of functions to use in particular situations
- COM125063 for legislation applying to this subject.