COM71030 - Enquiries: CTSA enquiries: repayment during enquiry

This subject is presented as follows

General

Whether or not you can repay during a Para 24 Sch 18 enquiry (and if so, when and under which statutory provisions) depends on two related issues

• Is the Para 15 time limit for amending the return open or expired

• Does the company pay by Quarterly Instalment Payments (Word 42KB) or not

(See the Company Taxation Manual at CTM92650 and CTM92090 for more information about repayments before liability is finally established in QIPs and non-QIPs cases.)

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Para 15 time limit for amending company tax return - open

If, during a Para 24 enquiry, a company is within time to amend its return under Para 15 then, whether or not the company is a quarterly payer, Para 31(3) says that the amendment does not take effect until the enquiry is completed.

The amendment does not restrict the scope of the enquiry, but may be taken into account, together with any matters arising in the enquiry. (Para 31(1)/(2).) See subject ‘Taxpayer Amendments’ (COM71020).

Para 31(3) also says that its application does not affect a claim under Section 59DA TMA 1970 for repayment in advance of liability being established. So a company may claim repayment before you have concluded an enquiry into its company tax return.

Provided you are satisfied that any such claim meets the requirements of S59DA (1), you should make the repayment. Use Function REOD (Reallocate Out Of COTAX) to reallocate the money to OAS, then provide the relevant information to Banking Operations to enable them to make the necessary repayment. (For full details of the procedure, see subject ‘Early Repayments CTSA APs - Owning office’ (COM125060) in section 'Non Automatic Repayments' of the ‘Repayts/Reallocations’ business area.)

Note: Companies that pay by quarterly instalments cannot claim under S59DA. Their claims are dealt with under the Quarterly Instalment Regulations. Regulation 6(8) disapplies S59DA and although Para 31(3) allows you to repay under S59DA, it does not do so for claims under Regulation 6. So you cannot repay any money that was paid as a quarterly instalment, to such a company during an enquiry. Instead, make the repayment when you give effect to the amendment as part of your conclusions after the enquiry is completed.

However, if the company claims in respect of the final balancing payment, payable during the transitional period, S59DA will apply because the final balancing payment is not a quarterly instalment. You can deal with such a claim in the same way as for a company not liable to pay by quarterly instalments. (For more information about the transitional period, see section ‘Quarterly Instalment Payments’ (COM95000) in the ‘Payments’ business area.)

After the transitional period ends there is no balancing payment on the normal due date, so quarterly payers with APs ending on or after 01/07/02 cannot receive a repayment under S59DA during an enquiry.

(For more information about companies that pay by quarterly instalments, see section ‘Quarterly Instalment Payments’ in the ‘Payments’ business area.)

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Para 15 time limit for amending company tax return - expired

If, during a Para 24 enquiry, a company is out of time to amend its return under Para 15 then, Sch 1A TMA 1970 will apply to any claim for repayment, whether or not the company is a quarterly payer. The Sch 1A claim should not be included in any subsequent Para 32 Closure Notice because it is not an amendment to the return.

Provided you are satisfied that any such claim meets the requirements of Sch 1A, you can give effect to the claim as soon as practicable by discharge or repayment.

If you enquire into the claim under Para 5 Sch 1A, the claim does not take effect until the Sch 1A enquiry is concluded by issuing a Para 7(4) Sch 1A Closure Notice. However, Para 4(3) allows you to give effect to the claim on a provisional basis at any time before then, to such extent as you think fit.

Note: If you open a Sch 1A enquiry into the claim you must handle it separately from the Para 24 enquiry. COTAX does not provide support for Sch 1A enquiries into claims and elections not made in a return. You must open, conduct and close those enquiries outside of COTAX.

Whether or not you open a Sch 1A enquiry

• You will be unable to record the Sch 1A claim on COTAX while the Enquiry In Progress signal is set for the Para 24 enquiry
• You can make a provisional repayment - by using Function REOD to reallocate the money to OAS and then providing the relevant information to Banking Operations to enable them to make the necessary repayment. (For full details of the procedure, see subject ‘Early Repayments CTSA APs - Owning office’ (COM125060) in section 'Non Automatic Repayments' of the ‘Repayts/Reallocations’ business area.)
• You must record the Taxpayer or Revenue Amendment to finalise the Para 24 enquiry before you can update COTAX with the details of the Sch 1A claim or the result of the Sch 1A enquiry
• When you have finalised the Para 24 enquiry on COTAX

• • Use Function RAMA (Record/Amend Assessment), ‘Process a Claim’ option, to record the Sch 1A claim on COTAX. If you have enquired into the Sch 1A claim, ensure that you suppress the assessing output. (You must do that because the wording of the computer-issued claims output is not appropriate to settling a Sch 1A enquiry)

For more information about claims and elections under Sch 1A, see subject ‘Claims And Elections Not Made In A Return’ (COM52030) in the ‘Claims / Reliefs’ business area and subject ‘Enquiries Under Schedule 1A TMA 1970’ (COM71040).

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Summary

For a list of functions to use in particular situations, see COM71011.

For legislation applying to this subject, see COM71012.