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HMRC internal manual

COTAX Manual

Payments: quarterly instalment payments: anti-avoidance provisions

Regulation 14 was an anti-avoidance provision for the introduction and bedding in of quarterly instalment payments.

A company may have been caught under the anti-avoidance regulations if on or after 25 November 1997 and before 30 June 2002 it:

  • caused the start or end date of a ‘relevant AP’ to change and / or
  • entered into any arrangements, the effect of which was to transfer some or all of its taxable profits to another company in the same group other than a non-resident company in whose hands the taxable profits transferred are outside the charge to UK CT, resulting in
  • an amount or amounts of CT for any part of an AP beginning after 1 July 1998 and ending before 1 July 2002 becoming payable later than it would otherwise have done.

A ‘relevant AP’ was an AP which, but for the action taken by the company outlined above, would have been a 12 month AP that ended after 24 November 1997 and before 1 July 2002 and started immediately after another AP.

The provisions did not contain a motive test but there were let outs for some specific changes and arrangements.

Details about the let outs are given in the Company Taxation Manual (CTM) at CTM92790.

If a company fell within the anti-avoidance provisions and was not let out, the company was liable to pay an amount that was effectively equal to interest at the rate applicable under S178 FA89 on the tax payments ‘deferred’ (Regulation 14(2)).

These cases are obviously now very rare and for more information on raising the charge and an example, see the Company Taxation Manual at CTM92800-92810 and CTM92840.

The charge under the anti-avoidance provision in Regulation 14 was not tax or penalty but was similar to interest.

To get the charge onto the COTAX record the caseworker had to write to the CT Unit Cumbernauld and ask for the charge to be posted onto the COTAX record for the company as debit interest in addition to any actual debit interest payable.

The CT Unit Cumbernauld used function RMIC (Raise Manual Interest Charge) to raise the charge.

By concession, if the tax was paid on the dates it would have been due if the AP had not been changed, HMRC regarded payment as accelerated in terms of Regulation 14(3) and no charge arose, except as in the normal way when the amounts paid are less than the amounts due.

For more information about this concession see the Company Taxation Manual at CTM92820-92830.

A caseworker had to ask for authority from Business Tax 1/1 to raise a charge under anti-avoidance provisions or to allow accelerated payments.

To prevent COTAX from calculating interest automatically in accelerated payment cases, the caseworker had to use function MAPS (Maintain AP Signals) to set the ‘credit / debit interest’ indicator (Word 29KB) (CDII) and ‘clerical interest’ indicator (CII (Word 32KB)) on the records of all the companies involved for the AP.

The company had to alert the CT Unit Cumbernauld to the fact that early payments were being made to avoid a charge arising under Regulation 14, paragraph 3 of The Corporation Tax (Instalment Payments) Regulations 1998 and that this had been agreed with the caseworker.

The CT Unit Cumbernauld accepted global payments from the companies involved, which were held in a suspense account and allocated when the liabilities were finalised.


  • COM95011 for a list of functions to use in particular situations
  • COM95012 for legislation applying to this subject.