SolvedCTM92760 | CTSA: quarterly instalments: intra-group surrender: examples
From HM Revenue & Customs · Company Taxation Manual
Example 1
Company A and Company B are members of the same group for the purposes of CTA10/S963.
They both have an accounting period from 1 August 2009 to 31 July 2010.
Both companies are believed to be liable to make quarterly instalment payments.
They make payments as follows:
| - | Company A | Company B |
|---|---|---|
| 14 February 2010 | £10,000 | £150,000 |
| 14 May 2010 | £8,000 | £160,000 |
| 14 August 2010 | £5,000 | £170,000 |
| 14 November 2010 | £1,000 | £192,000 |
| Total paid | £24,000 | £672,000 |
The total payments at 14 November 2010 reflect:
estimated CT liabilities of £40,000 for Company A,
estimated CT liabilities £1.12m for Company B.
On 28 June 2011 both companies file their returns showing:
Company A’s profits are below the upper limit, so it was not liable to make quarterly instalment payments. Its tax liability is computed at £34,420.
Company B’s liability is £1.2m.
The quarterly instalment payments that Company B should have made, based on a total liability of £1.2m are four instalments of £300,000. So Company B’s cumulative underpayment of instalments is:
| - | Cumulative amount due | Cumulative amount paid | Cumulative underpayment |
|---|---|---|---|
| 14 February | £300,000 | £150,000 | £150,000 |
| 14 May | £600,000 | £310,000 | £290,000 |
| 14 August | £900,000 | £480,000 | £420,000 |
| 14 November | £1,200,000 | £672,000 | £528,000 |
Company A and Company B give joint notice of surrender. (No notice under CTA10/S963 (6C) is needed because Company A’s claim relates to all the tax it has paid.)
The instalment tax paid by Company A (£24,000) is treated as paid by Company B on the dates on which Company A paid it.
Company A is treated as if the tax had been repaid to it on those dates.
It follows that:
Company A is treated as not having made any quarterly instalment payments,
Company A’s tax liability becomes due on 1 May 2011, the normal CT due date,
Company B needs to pay a further £504,000 without delay, to bring its total instalment payments (including the refund surrendered by Company A) up to £1,200,000.
Example 2
Company C and Company D are members of the same group for the purposes of CTA10/S963.
They both have an accounting period 1 August 2009 to 31 July 2010.
Both are liable to make quarterly instalment payments.
They estimate their liabilities and pay tax as follows:
| - | Company C |
| Estimated liability payable in instalments | Company C |
| Payments made | Company D |
| Estimated liability payable in instalments | Company D |
| Payments made | |||||
|---|---|---|---|---|---|
| 14.2.10 | £32m | £8m | £16m | £4m | |
| 14.5.10 | £32m | £8m | £16m | £4m | |
| Total payments so far | - | £16m | - | £8m |
On 1 July 2010 they revise their estimates of the liabilities to be paid by instalments to £28m and £20m respectively.
On this basis, the total amounts of the quarterly instalment payments due to date are £14m and £10m.
Company C can make a repayment claim of £2m under Regulation 6 (see CTM92650) because no tax is now believed to have become payable in instalments.
Company C claims repayment of £2m, which is surrendered to Company D.
Company C gives notice under CTA10/S963 (6C) that the £2m is to be treated as:
£1m paid on 14 February,
£1m paid on 14 May,
Company C is treated as if those amounts had been repaid to it on those dates and Company D is treated as having paid those amounts on those dates.