COM23171 - 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

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 (Word 29KB) 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

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Initial Actions

2. Use Function TAXW (Taxpayer Worklist) to find any work list entries that you need to deal with before or after issuing the Revenue Determination
3. Review any available information to
 
  • Establish the status of the company
 

Use 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
4. Do not make a Revenue Determination if the company
 
 
  • 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
 
  • Has ceased
5. 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
6. If you need to update the company’s COTAX record
 
  • Select the [Options] button in Function DRNR (screen COT813A) and enter the function code on Options screen COT813C for
 
    • Function MAPD (Maintain AP Dates) to record a period of dormancy or any other changes to the company’s AP record
 
Or
 
    • Function ACTP (Amend CT Payer Details) to record the date of liquidation, striking off, or cessation
7. 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
  Note: If the company pays the Revenue Determination, you cannot raise another one. Nor can you make a Discovery Assessment (Word 28KB) without evidence of a loss of tax to the Crown.

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No determination required (NDR)

8. If, having considered all the relevant information, you decide that no determination is required
 
  • Use Prepare a Revenue Determination in Function RAMA (Record / Amend Assessment) to set the NDR signal
 
  • Select the ‘No Penalty Required’ option presented to you at the end of the function or use Function PPEN (Prepare Penalty Determination)
 

Note: Where there is a manual remission on the AP COTAX only allows you to set the NDR signal.

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Making a Revenue Determination when no return delivered

9. If you decide a determination is required
 
  • Use Prepare a Revenue Determination in Function RAMA (Record / Amend Assessment) to make the determination
10. If the ‘Section 55 satisfied?’ indicator is displayed as ‘N’ on screen COT122F, the company has not fulfilled its obligations under S55 FA2004 (COM40078)
11. COTAX next displays screen COT122N. When you first see this screen, it is displayed in short form
  You can make an estimate for
 
  • Schedule D Case I
 
  • Case III profits
 
  • Case I losses brought forward
 

Or
 
  • Unspecified total profits
 

Note: At least one amount must be estimated
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 on screen COT122N to see the full form
 
  • Enter the amount of the income or gain
  Note: You should avoid making a Revenue Determination that includes only S455 CTA 2010 liability (formerly S419 ICTA 1988) (Close Company Loans to 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 on screen COT122N
14. If, exceptionally, your entries include carry-backs, COTAX shows them to you in summary form on screen COT122M
 

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. If your entries do not include carry-backs COTAX displays screen COT122H 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
 
 
16. Set the Quarterly Payer signal (Word 31KB) 
 
  • If the value of the signal is ‘Potential’, you must decide what the company’s Quarterly Payer 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. Therefore, you have to decide on the company’s Quarterly Payer status for the AP
 
  • Do not set the signal to ‘Yes’ if the company has made a return for the immediately preceding AP and was not a large company for that AP
 
  • Only set the signal to ‘Yes’ if it is reasonable, on the basis of the figures in the determination, and other information in the company’s file, to contend that the instalment provisions should apply
 
  • If you set the indicator to ‘Yes’, and you need to issue a Paragraph 38(2) determination that tax is payable in instalments, use the free format message field in Function RAMA to enter an appropriate message. For example,
 

‘Para 38(2) Sch18 FA98. The tax charged is payable by instalments on the dates provided by regulations made under S 59E TMA70’
17. COTAX compares your determination figures with the value of the Quarterly Payer signal. It 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 that the company has no associated companies
  Example 1 (Word 31KB)
18. When you amend the Quarterly Payer signal, COTAX displays an advisory message telling you to review the signal for later APs by using Function MAPS (Maintain AP Signals)
  Example 2 (Word 27KB)
 
  • Finish making the Revenue Determination with Function RAMA
 
  • Deal with the penalty position
 
  • Use Function MAPS to review the Quarterly Payer 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
 

There usually will be as COTAX will have created it when a return was logged for an AP ending in, but not matching, the period specified in the notice to deliver
 

If there is not
 
    • Use Function MAPD to record it and 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 will allow you to make a Revenue Determination for it
 
  • 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 make it
 

Note: Unless the filing date for the outstanding period is ascertainable (Word 44KB), you will normally have to wait until 30 months after the end of the period specified in the notice to deliver
22. Use Prepare a Revenue Determination in Function RAMA (Record / Amend Assessment) to make a Revenue Determination for the outstanding period
23. Deal with the penalty position, either by selecting the option of automatic issue presented to you at the end of RAMA or 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 Reduce Determination to zero in Function RAMA to reduce the determination to nil

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Reinstating a Revenue Determination

25. If you need to reinstate a determination, for whatever reason
 
  • Use Reinstate Determination in Function RAMA

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