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HMRC internal manual

Debt Management and Banking Manual

Interest: Interest Review Unit (IRU): Corporation Tax (CT): CTSA Quarterly instalment payments (QIPs)

The operation of QIPs is very complicated and can be contentious. Where the case appears to be (or may become) debatable or it involves a group of companies and the situation may cut across the group, advice should be sought from the CT Business Support team.

From 1999 ‘large’ companies started to pay their CT in four instalments a year. HMRC also started to:

  • charge debit interest on instalments that were paid late or where not enough was paid on instalments
  • pay credit interest on early or overpaid instalments.

More information about QIPs can be found in the COTAX Manual (COM) - Payments.

Interest should be upheld where a company objects to paying debit interest because they either:

  • have difficulty deciding that they should be paying by instalments
  • are unable to accurately work out the amount of each instalment.

A company may give a number of reasons for this, but generally will claim that they were not aware that they had become liable to pay QIPs until someway into the financial year. So they did not know they had to pay by instalments until after at least one of the instalments became due. Where an objection is received on this basis, explain that the due dates are fixed and that the interest charging laws take no account of these types of difficulties.

Where a company objects to being charged debit interest because HMRC failed to send reminders, the interest should be upheld. The legislation makes in clear that it is the company’s responsibility to decide if they need to make QIPs and take the initiative to make the payments at the correct times.

Sending reminders to companies, who may need to pay by instalments, is a customer service measure. If reminders are not sent it does not affect the fact that the legislation says that a company should act without prompting.

Delay in raising a debit interest charge

A company may object to an interest charge because it has taken HMRC some time to correctly work out the credit or debit interest position. This usually happens where either:

  • the company does not show on their tax return that they should be paying by instalments
  • the information was not recorded when dealing with the return.

This means that the Quarterly Payment (QP) signal is not set and therefore the IT system will not correctly work out the credit and debit interest position. The system is able to recognise cases where the QP signal may need to be set but is not, and places a note on a worklist for this to be reviewed and the signal set where needed.

Refer to DMBM405010 for handling objections because of HMRC delay in raising a debit interest charge.