COM80100 - Interest: how interest is calculated: supplementary tax on north sea oil companies
A supplementary tax in respect of North Sea (UK Continental Shelf) oil ring fence trades was introduced on the 17 April 2002.
Accounting periods straddling 17 April 2002
There are special rules for paying this tax during the introductory period where the accounting period of the company straddles the start date of 17 April 2002 and the quarterly instalment payment (Word 42KB) (QIP) signal is set to ‘Y’ for that accounting period.
These special rules affect the quarterly instalment due dates (Word 42KB). As well as the normal quarterly instalment due dates there will be up to an additional 4 further instalments. These instalments are worked out from the 17 April 2002 to the end of the accounting period using the normal rules for calculating instalments. See business area Quarterly Instalment Payments (COM95000) on how to work out quarterly instalments amounts and due dates.
This special rule only applies to accounting periods straddling the 17 April 2002, future years will not have any special arrangements; the normal rules for quarterly instalment payments will apply.
Accounting periods starting on or after 17 April 2002
It is important to ensure the correct information is entered in the ‘Tax calculation’ area in Function RAMA (Record / Amend Assessment). You must ensure that any change to the ‘RF Profits included’ in the ‘Deductions/Reliefs’ section is matched by a change to the ‘RF CT included’ in the ‘Tax calculation’ section.
Interest
Credit interest (Word 34KB) and debit interest (Word 31KB) are chargeable on this supplementary tax from the new instalment due dates. Credit / debit interest is still chargeable on the original tax charge (Word 28KB) using the normal quarterly instalment due dates.
Any credit / debit interest charges raised on the supplementary tax will not be shown separately, in function VPPD (View Payments and Postings Details), to the credit / debit interest raised on the rest of the tax charge. There will be one posting for credit interest and one posting for debit interest.
The credit / debit interest charge can be viewed in Function DINT (Display Interest Computation). You will be able to view all the instalment due dates and amounts due for the supplementary and original tax charge. You will also be able to view the full interest accrual details for each separate instalment.
Any credit / debit interest charges that are due will be calculated when
- The normal due date (Word 49KB) has passed
And
- A tax charge has been recorded on the AP
COTAX will be capable of automatically calculating and raising credit / debit interest charges in the majority of these cases. Where it cannot raise the charge automatically an entry will be made on the CDIW (Credit Debit Interest Worklist) and the charge can be raised manually using function RMIC (Raise Manual Interest Charge).
For a list of forms relevant to this subject, see COM80011.
For a list of functions to use in particular situations, see COM80012.
For legislation applying to this subject, see COM80013.
