COM95060 - payments: quarterly instalment payments: intra group surrenders FA 1989 S102 and QIP regulation 9

Where a company has made one or more instalment payments and is subsequently entitled to a refund of some or all of that tax, instead of receiving a repayment Regulation 9 extends S102 FA 1989 so that the company can surrender part or all of the refund to another group company or companies.

(Note where a company has successfully claimed a repayment under Regulation 6 - see section ‘Non Automatic Repayments’, subject ‘Early Repayment CTSA APs - Responsible Office’ (COM125060) and also CTM92650 - it may also choose instead to surrender it under Regulation 9).

For the purposes of S102 FA 1989 companies are members of the same group only if they qualify to be treated as such for group relief purposes.

A surrender can only take place if the

• Company making the claim is entitled to a refund on the date the claim is made
• Overpayment has arisen in respect of payments made in good faith on account of the claiming company's own estimated tax liability

Regulation 9 only applies in relation to Corporation Tax paid by instalments on account of the surrendering company's own liability. Either the donating or receiving company must be a Quarterly Instalment Payment (QIP) case for a claim to be made.

The surrendering company must give notice to the Inspector at the time when the joint surrender notice is given, specifying the payment(s) out of which the refund is to be treated as made. The Inspector makes the surrender using Function REWD (Reallocation Within COTAX) and the reallocated payments will retain their original EDPs. For more information about giving effect to these surrenders see subject 'S102FA1989/Reg 9 surrender' (COM122020).

The effect of a surrender under Regulation 9 is to enable a group of companies to neutralise the effect of debit and credit interest that it would otherwise suffer when too much instalment tax had been paid by one company and not enough by another or others.

Banking Operations should not reallocate an amount to another company. Any request to reallocate an amount to another company should be referred to the Inspector to consider whether the proposals are acceptable under S102.

As a Group Payment Arrangement (Word 33KB) (GPA) is not itself a company, neither S102 nor its extension under Regulation 9 can apply between a GPA and an individual company. This is true whether or not that company is a participator in the arrangement. Individual participating companies can receive surrenders from group companies under S102, including its extension under Regulation 9, but they cannot make surrenders of Corporation Tax under Regulation 9 until the status of the Group Payment Period (Word 28KB) is cleared for the AP.

For more information see the Company Taxation Manual (CTM) at CTM92740-92760.

For legislation applying to this subject, see COM95012.