COM30110 - Background: company taxation overview: quarterly instalment payments
This subject is presented as follows:
Introduction
Large companies
Companies becoming large
Company not treated as large
Introduction
The Corporation Tax (Instalment Payments) Regulations 1998 (SI 1998 No 3175), as amended by the Corporation Tax (Instalment Payments) (Amendment) Regulations (S.I. 1999/1929) contain the requirement for large companies to pay tax in quarterly instalments. This requirement was introduced at the same time as the introduction of CTSA.
Quarterly Instalment Payments were phased in over 4 years, and apply only to
- Large companies
- CTSA APs
- Tax required to be self assessed, that is
- CT chargeable on the company’s profits
- Tax chargeable under S455 CTA 2010 (formerly S419 ICTA 1988) on close company loans to participators
- Tax chargeable under Section 747 ICTA 1988 (Controlled Foreign Companies)
For more information about the working arrangements for payers of quarterly instalments see section ‘Quarterly Instalment Payments’ (COM95000 onwards) in the ‘Payments’ business area.
Large companies
A company is ‘large’, for the purpose of Quarterly Instalment Payments, if Its profits for an AP exceed the S13 ICTA 1998 ‘upper relevant maximum amount’ (URMA) which is in force at the end of that period
As in the case of Section 13
- ‘Profits’ means profits chargeable to CT
Plus
- Franked investment income received, otherwise than from the company’s group
URMA is proportionately reduced where the AP is less than 12 months. Where the company has associated companies, URMA is reduced by dividing it by one plus the number of those companies.
A company is not large if its total tax liability does not exceed £10,000, (£5,000 for accounting periods ended before 1 July 2000, proportionately reduced if the AP is less than 12 months.
Companies becoming large
Regulation 3 contains provisions to protect growing companies from having to make Quarterly Instalment Payments for the first period in which they are large unless the growth is very substantial. Under these provisions, a company will not have to make Quarterly Instalment Payments for an AP if
- Its profits for the AP do not exceed £10 million
And
- It was not large in the 12 months preceding the AP
‘Profits’ means the same as it does above, and the £10 million limit is proportionately reduced for
- APs of less than 12 months
And
- Associated companies
Associated companies are counted for this purpose as at the day before the start of the AP (or on the first day of the AP if the previous day did not fall within an AP).
Company not treated as large
A company is not treated as large in the 12 months preceding the AP if
- There is any part of that 12 months in which it did not exist or did not have an AP
Or
- An AP in which it was not a large company (other than by virtue of its not being treated as large because of the Companies Becoming Large provisions above) falls or ends within that 12 month period
For legislation applying to this subject, see COM30021.
