COM95080 - Payments: quarterly instalment payments: pursuit

Companies must decide for themselves if they need to make instalment payments.

Note: The date from which pursuit will begin depends on the AP ending date. (It is only for pursuit purposes that the due date differs for QIP companies, for all other purposes such as charging of Credit Interest (Word 34KB), Debit Interest (Word 31KB), late payment interest (Word 27KB), penalties, the normal due date still applies.)

Pursuit will begin from the final instalment due date if the liability is known

No recovery or enforcement action is to be taken before the relevant pursuit due date and the posting of the tax charge, even if instalment payments seem to be due because the Quarterly Instalment Payer signal (Word 31KB) is set to P or Y.

If recovery or enforcement action commences before the normal due date but the Quarterly Instalment Payment (QIP) signal is changed from 'Y' to 'N'

• The payment application sequence will stop and automatically recommence after the normal due date

• LA or LA-ENF status will be cancelled
• Any CII and / or CDII signal will remain set but if the record was also LA or LA-ENF, this status will be cancelled and the record automatically made RFI
• Where PLA is set, a LA or LA-ENF status will not be effected

Subsequent recovery and enforcement procedures should proceed in accordance with the guidance provided in the section 'Automatic and Clerical Pursuit' in the ‘Pursuit’ business area of the COM.

A company is required to show in its return (at box 95) if it considers that it was liable to make instalment payments. When the return is captured the QIP signal is set to Y (liable to make instalment payments) or N on the AP, depending whether the tick box is completed or not. Once the return has been captured the signal must not be manually set to P.

COTAX automatically carries the 'N' signal forward to the next AP. If the captured signal is 'Y' then COTAX sets the value in the next AP to 'P'. When an AP is superseded the value of the QIP signal is carried forward to the linked superseding AP.

If the company completed box 95

• COTAX will compute Credit / Debit interest on the basis that it is liable to pay by quarterly instalments

If the company did not complete box 95

• COTAX will compute Credit interest on the basis that it is not liable to pay by quarterly instalments

Whether box 95 is completed or not, if the AP is linked to an 'open' Group Payment Period for a Group Payment Arrangement (Word 33KB) 

• Credit / debit interest is not calculated and posted until the Group Payment Period is 'cleared'. For more information see the section 'Group Payment Arrangements' in this business area

COTAX automatically checks whether the details on the return correspond with the entry captured from Box 95. Where there is an apparent discrepancy the case is entered on the Quarterly Payer Review List (QPRW). Where the number of associated companies has not been returned COTAX may put the case on the Work List. It is good practice to regularly review this Work List because there may be apparent discrepancies as listed below

• If a company does not complete box 95 and the profits exceed URMA, COTAX will enter the case on the QPRW Work List to draw the Inspector's attention to the apparent discrepancy. The company may fall within the Regulation 3(3) ‘companies becoming large exemption’. If so, you should delete the entry from the Work List. If it is not, set the signal to Y and review the interest position
• If the company has completed Box 95 but the profits are below URMA the company may be a QIP case because there are associated companies, not mentioned on the return, that reduce the level of URMA. You will need to check if there have been any payments made that suggest the company is a QIP case.
• An Inspector may be able to review the file or accounts to establish the existence of any associated or grouped companies. Do not contact the company or agent to ask any questions that could be construed as opening an enquiry. If you establish that the company is a QIP case then you need to set the QIP signal to Y and review the interest position. It is also good customer service to tell the company (and any agent) that you have done this and why you have changed the signal. If you do not then the company may well be charged debit interest without being told the reason.

If you cannot establish that the company is a QIP case, the company may have completed Box 95 by mistake. You need to set the QIP signal to N and check that no debit interest is charged and that any credit interest due is shown as payable

• There will be cases when a company does not complete Box 95, the profits are below URMA but the company is a QIP case because of the number of associated companies. Such cases will not appear on the Work List because COTAX cannot identify any apparent discrepancy. You may only discover such cases if quarterly payments were actually made and the company or agent notifies you of a repayment of credit interest they were not expecting

If a company is overpaid, does not complete box 95 and the profits are less than URMA COTAX will enter the case on the LOPD work list in the following circumstances

• The repayment reallocation inhibit signal (automatic or manual) has previously been set
• The following AP QIP signal was set to Y or P.

COTAX can not automatically reallocate payments to a company's AP if that AP is linked to an 'open' Group Payment Period for a Group Payment Arrangement. For more information see the section 'Group Payment Arrangements' (COM96000 onwards).

If an overpayment arises because

• A payment is received (payment type other than BACS or CHAPS) which takes the total amount paid above the total amount due for the AP, and
• No other inhibitions exist

COTAX automatically enters the case on the ORUR Work List and inhibits repayment for 14 days.

In view of the possible errors that may have taken place the Inspector should review the QIP signal as part of the risk assessment of the return. This usually happens after the self assessment is recorded and any payment application is made or overpayment processed. The computer's action is based initially on the company's declaration of its position.

Where the QIP signal is set to Y or P for an AP, payslips are issued a month before each instalment date for the AP. This is a customer service measure and does not effect the principle that the Regulations require the company to act without prior prompting. See section 'Group Payment Arrangements' in this business area if the company is a participating company (Word 28KB) in a Group Payment arrangement.

The Inspector can manually set or change the QIP signal for an AP using Functions

• MAPS (Maintain AP Signals)

• RAMA (Record / Amend Assessment)

Banking Operations / Debt Management Offices may set the QIP signal to P or N using function RAPP (Revise AP Pursuit) but cannot set or amend the signal to Y. The value of the QIP signal for an AP is displayed in Functions

• RAPP (Revise AP Pursuit)

• DAPD (Display AP Details)

If the QIP signal is set to P or Y and the company requests Time to Pay, you should refer the case to DMB. You can find further guidance in the Debt Management and Banking Manual at DMBM800000.

The Regulations require QIP companies to pay their CT by instalments (on the Instalment due dates) on their best estimate of the liability for the AP. A request to pay less than they consider due at an instalment date is not a request for time to pay as such.

On receipt of such a request DMB will explain that if the company chooses not to pay the estimated liability for one or more instalments

• Debit interest will arise on inadequate payments or payments made after the instalment due date but prior to the normal due date. For more information see section 'How Interest is Calculated' (COM80000 onwards)
• Late payment interest will arise on payments made after the normal due date

• The Inspector may later consider that the company has incurred a penalty. There is nothing in the Regulations in mitigation for a company not paying the estimated instalment liability

For more information see the Enquiry Manual at EM8301 and EM8330.

For a list of functions to use in particular situations, see COM95011.