Quarterly Instalment Payments (Introduction)

Quarterly Instalment Payments (QIPs) are governed by the Corporation Tax (Instalment Payments) Regulations 1998 (S.I. 1998/3175) and made under the authority of S59DA(8) and S59E TMA70, Section 826A ICTA 1988 and Section 30 FA 1998. S.I. 1998/3175 was amended by the Corporation Tax (Instalment Payments) (Amendment) Regulations 1999 (S.I. 1999/1929). They were further amended by the Corporation Tax (Instalment Payments) (Amendment) Regulations 2000 (S.I. 2000 no.892).

References to regulations in this section are references to those regulations, unless otherwise stated.

This is a specialist area, more comprehensive guidance is available in the Company Taxation Manual (CTM) from CTM92505 onwards. This section seeks to give an outline and some specific, COTAX related procedural guidance.

Many QIP cases will have their tax paid through a Group Payment Arrangement. For more information see section 'Group Payment Arrangements' in this business area and the Company Taxation Manual (CTM) at CT92505 onwards.

Large companies with APs ending on or after 1 July 1999 have to pay their liability in quarterly instalments (two of which are normally due before the end of the AP) rather than in one lump sum nine months and one day after the end of the AP.

A company is large if its profits for the AP exceed the Upper Relevant Maximum Amount (URMA), as defined in Section 13 ICTA1988, in force at the end of that period.

Notes:

1. Profits mean chargeable profits plus non-group franked investment income
   
   
2. URMA is reduced proportionately when the AP is less than 12 months
   
   
3. URMA is reduced when the company has associated companies by dividing URMA by 1 plus the number of those companies
   
   
4. Extra Statutory Concession C9 applies when you consider the number of associated companies

If a company's 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, then that company does not have to pay by instalments. This means some companies in a group may have to make instalment payments while others do not.

Companies do not have to pay their CT by instalments in an AP if

• Their profits for that AP do not exceed £10 million
  
  And
  
  
• They were not large in the 12 months preceding the AP (except because of this exemption).

Note: COTAX cannot apply the 'companies becoming large' exemption at Regulation 3(3) (see Company Taxation Manual (CTM) at CTM92530), so a fairly high proportion of cases that COTAX 'thinks' should be QIP cases may escape under that provision.

Where there are associated companies, the £10 million threshold is divided by one plus the number of associates. The number of associates to be taken is usually the number at the end of the preceding AP. The threshold is also proportionately reduced for short APs.

The Company Taxation Manual (CTM) at CTM92520 and CTM92530 gives examples.

To help transition to the new system, large companies initially had to pay only part of their tax by instalments.

Over the transitional period, where the AP ended

• Between 01/07/1999 and 30/06/2000

• Between 01/07/2000 and 30/06/2001 inclusive

• Between 01/07/2001 and 30/06/2002 inclusive

Where the AP ends on or after 01/07/2002

If a company

• Concludes that it has paid too little tax to date, it should make a top-up payment
  
  
• Considers that it has paid too much it may deduct the excess from the next instalment payment
  
  
• Believes the payments to date total more than the cumulative liability, the company may claim repayment under Regulation 6. For more information see business area 'Repayts/Reallocs', section 'Non Automatic Repayments', subject 'Early Repayment CTSA APs - Owning Office' and also CTM92650.

Such claims will be dealt with by the appropriate Area Office. Top-up payment(s) or a claim to repayment may be made at any time.

Companies that are not large companies will not have to pay their CT by instalments. They will have to pay their full liability by the normal due date.

Companies must indicate on their company tax return if they are liable to make QIPs. This information is captured when the return is logged and captured. If the SA return is subsequently unlogged the QP signal is automatically changed from 'Y' to 'N'.

Interest ( Debit Interest) is charged where insufficient tax is paid by the instalment due dates or instalments are paid late. We pay Interest ( Credit Interest) where more than the tax due is paid by the instalment due dates or the tax is paid early. For more information see subject 'How Interest is Calculated' in the 'Interest' business area of the COM.