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HMRC internal manual

COTAX Manual

Assessing: CTSA assessments: revenue determinations (Action Guide)

To make, reduce to nil, or reinstate a Revenue determination, consider steps 1 - 25 below.

The guide is presented as follows.

Action Steps
Identifying cases for potential revenue determination Step 1
Initial actions Steps 2 - 7
No determination required (NDR) Step 8
Making a revenue determination when no return delivered Steps 9 - 18
Making a revenue determination for an outstanding period Steps 19 - 23
Reducing a revenue determination to nil Step 24
Reinstating a revenue determination Step 25

Identifying cases for potential revenue determination

  1.  Unless you have identified a case that needs a revenue determination because there is an outstanding period (Word 28KB), use function DRNR (Determination Required No Return List) to see cases where no return has been logged and no determination made 18 months after the end of an AP.

Initial actions

  1.  Use function TAXW (Taxpayer Worklist) to find any work list entries that you need to deal with before or after issuing the revenue determination.

  2.  Review any available information to establish the status of the company, including using the Companies House website to establish that the company is still on the Register and whether accounts have been submitted and decide whether you need to make any changes to the AP record.

  3.  Do not make a revenue determination if the company is dormant, is in liquidation because of a winding-up order, either compulsory or creditors’ unless you know of a specific liability for the AP (as HMRC is unlikely to receive payment towards any outstanding CT debt), has been struck-off or has ceased.

  4.  If the company is new and has not returned form CT41G, there will be no established pattern of APs. Consider telephoning the company’s agent or the company itself to find out the correct AP dates. Doing that now may avoid later complications with the AP record.

  5.  If you need to update the company’s COTAX record, select the [Options] button in function DRNR and on the next screen enter the function code for MAPD (Maintain AP Dates) to record a period of dormancy or any other changes to the company’s AP record or ACTP (Amend CT Payer Details) to record the date of liquidation, striking off, or cessation.

  6.  Use function VPPD (View Payment and Posting Details) to check the payment position. You need to ensure that the determination is large enough to cover any payments made and does not create an overpayment. If the company pays the revenue determination, you cannot raise another one, nor make a discovery assessment without evidence of a loss of tax to the Crown.

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No determination required (NDR)

  1.  If, having considered all the relevant information, you decide that no determination is required, use the ‘prepare a revenue determination’ option in function RAMA (Record / Amend Assessment) to set the ‘NDR’ signal and select the ‘no penalty required’ option presented to you at the end of the function or use function MPEN if the penalty option screen isn’t displayed.

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Making a revenue determination when no return delivered

  1.  If you decide a determination is required, use the ‘prepare a revenue determination’ option in function RAMA (Record / Amend Assessment) to make the determination.

10. The ‘Section 55 satisfied?’ indicator is displayed as ‘N’ on screen COT122F to advise you that the company has apparently not fulfilled its obligations under S55 FA2004.

11. The following screen, COT122N is initially displayed in short form. You can make an estimate for the following, depending on the AP start date.

  • Trading profits.
  • Trading losses brought forward.
  • Annual payments not taxed or Schedule D Case III.

Alternatively, you can enter one figure for total profits.

12. If you want to assess a particular source of income or gain not available in the short form, select the [Switch to Full] button to see the full form and enter the amount of the income or gain.

You should avoid making a revenue determination that includes only S455 CTA 2010 liability (close company loans and arrangements to confer benefits on participators). If you do so and subsequently agree that the company does not need to submit a return, COTAX may not allow you to reduce the revenue determination to nil.

13. When you have finished making your entries select the [OK] button.

14. If, exceptionally, your entries include carry-backs, COTAX shows them to you in summary form on the next screen and you can accept the carry-backs as shown or amend the interest effective date of any carry-back and the order in which the carry-backs are processed.

15. Whether or not your entries include carry-backs, COTAX then displays a screen for you to confirm the summary determination details. You can:

  • enter a free format message to be shown on the printed output
  • tell COTAX if, and when, a determination has been manually issued
  • choose to suppress assessing output
  • review the company’s quarterly instalment payment (QIP) status.

16. Set the ’quarterly instalment payment’ signal.

If the value of the signal is ‘potential’, you must decide what the company’s QIP status is and change the signal to ‘Yes’ or ‘No’. You need to do that because the revenue determination has effect as if it were a self assessment, unless and until the company delivers its return and self assessment within the relevant time limit, so you must decide on the company’s QIP status for the AP.

Do not set the signal to ‘Yes’ if the company has made a return for the immediately preceding AP and it was not a large company for that AP. Only set the signal to ‘Yes’ if it is reasonable to contend that the instalment provisions should apply, on the basis of the figures in the determination and other information you hold.

If you set the indicator to ‘Yes’, and you need to issue a determination that tax is payable in instalments, enter a free format message in function RAMA such as ‘Para 38(2) Sch18 FA 98 - the tax charged is payable by instalments on the dates provided by regulations made under S 59E TMA 70’.

17. COTAX compares your determination figures with the value of the ’quarterly instalment payment’ signal and displays a warning message if there is an apparent inconsistency based only on the figure of profits in the determination. COTAX makes its calculation as if there is no franked investment income and the company has no 51 per cent companies. Example 1 (Word 31KB)

18. When you amend the ‘quarterly instalment payment’ signal, COTAX displays an advisory message telling you to review the signal for later APs using function MAPS (Maintain AP Signals). Example 2 (Word 27KB)

Finish making the revenue determination, deal with the penalty position and se function MAPS to review the ‘QIP’ signal for later APs.


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Making a revenue determination for an outstanding period

19. If you have received a return for an AP ending in the period specified in a notice to deliver but you think there is an outstanding period (Word 28KB), use function DAPD (Display AP Details) to check whether there is an existing AP that matches the outstanding period.

If there is not a matching AP, use function MAPD to create it and make any other changes needed to the company’s AP record.

20. Once the outstanding period has been created on the company’s AP record, function RAMA allows you to make a revenue determination for it and the outstanding period may, in due course, appear on the DRNR work list.

21. Before you make the determination, check the relevant time limits to confirm that you are legally entitled to do so. Unless the filing date for the outstanding period is ascertainable (Word 44KB), you normally have to wait until 30 months after the end of the period specified in the notice to deliver.

22. Use the ‘prepare a revenue determination’ option in function RAMA (Record / Amend Assessment) to make a revenue determination for the outstanding period.

23. Deal with the penalty position, normally by using function PPEN (Prepare Penalty Determination).

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Reducing a revenue determination to nil

24. If a determination becomes ‘stranded’, that is, stored without a link (Word 30KB), you may need to intervene. If you decide that the determination is of no effect (for example, where the company establishes that no return is due in response to the notice to deliver), use the ‘reduce determination to zero’ option in function RAMA to reduce the determination to nil.

Reinstating a revenue determination

25. If you need to reinstate a determination, for whatever reason, use the ‘reinstate determination’ option in function RAMA.