View the related Tax Guidance about Overpayment relief
Paying VAT
Paying VATThis guidance note provides an overview of how to pay HMRC VAT that is due and when it must be paid.Please see the Guide to completing a UK VAT return and Flat rate scheme (FRS) â operating the scheme guidance notes for information on how to complete and submit a VAT return. Making a VAT paymentIn order to reduce the risk of incurring interest and penalty charges it is important to know how to pay HMRC VAT that is due and when it must be paid. Guidance regarding these points is provided under separate headings in this guidance note.What are the ways to pay VAT?The table below provides a summary of ways to pay VAT to HMRC and includes links to HMRC guidance.VAT payment methodHMRC guidanceDirect debitPay VAT direct debitVAT instruction to your bank or building society to pay by direct debit VATC9Approving a payment through an online bank accountPay VAT approve payment through your online bank accountBank transferPay VAT bank detailsPaying online by debit or corporate credit cardPay VAT by debit or credit card onlinePaying at a bank or building societyPay VAT bank or building societyStanding order if the business uses the annual accounting scheme or is required to make payments on account Pay VAT standing
Interest on tax overpaid by companies
Interest on tax overpaid by companiesA harmonised regime is in place in respect of interest accrued on late payments of tax and on the refund of overpayments of tax. The rules applicable to late and underpaid tax are set out in the Interest on tax underpaid by companies guidance note. It was originally intended that the harmonised interest regime would apply across all taxes; however, to date, corporation tax remains outside its scope. Nonetheless, the current formula for determining the rates applicable to overpaid corporation tax and the rate for those taxes and duties within the harmonised interest regime is the same (see below). The current and historic rates of interest applied by HMRC to refunds of corporation tax are provided on the GOV.UK website. See Simonâs Taxes A4.629 for a list of taxes and duties covered by the interest rules and their respective commencement dates.When is interest payable by HMRC?The most common scenario in which interest is paid to a company by HMRC is where the corporation tax liability of a company has been paid early or where an overpayment of corporation tax has been made. However, a payment of interest can also arise to companies in respect of the following:â˘repayment of income tax deducted at sourceâ˘payment of an R&D tax creditâ˘payment of a land remediation tax creditâ˘payment of a credit arising from a claim for one of the creative sector tax reliefs, such as the film tax creditâ˘carry back of losses (see
Self assessment â amendments and corrections
Self assessment â amendments and correctionsOnce a self assessment tax return has been filed, both HMRC and the taxpayer (or the agent) has the right to make changes to the return. There are different time limits depending on whether it is a correction by HMRC or an amendment made by the taxpayer.Correction of the tax return by HMRCHMRC has the right to amend the tax return within nine months of the date of receipt (ie the date the return was filed rather than the due date for filing) without opening an enquiry. Usually, HMRC does this to eliminate or to reverse any obvious errors or mistakes within the return. These are usually arithmetical errors, although HMRC can reverse any technical mistakes made by the taxpayer in completing the return. HMRC will notify the taxpayer of any amendments made. The agent should receive a copy of this notification. The taxpayer is not bound to accept the correction. The correction can be rejected within 30 days of the date the notice was issued by HMRC (ie not the date of receipt of the notice). If the agent needs to reject the correction, it is suggested they do so in writing, stating the reason(s) they believe the correction is incorrect. If the correction is rejected and HMRC does not agree with the reason for the rejection, it is likely that the Officer will open an enquiry into the return. See the Types of checks on returns guidance note.For further reading, see Simonâs
Company tax returns â making claims
Company tax returns â making claimsThere are a number of claims which may be made in a company tax return (or the relevant supplementary pages), including the following:â˘utilisation of a companyâs own lossesâ˘surrender / relief of losses between group companiesâ˘claims for capital allowancesâ˘claims for research and development tax relief (RDEC or the repayable credit) â see the R&D tax relief administration, interaction with other reliefs and anti-avoidance guidance noteFA 1998, Sch 18, Pt VII, para 54Claims may be amended within the normal time limit, which is 12 months following the usual filing date. See the Making amendments to company tax returns guidance note for further details about the process to follow.Other claims not made on a CT600 include overpayment relief and special relief. These are covered in more detail below.Overpayment relief claimsOverpayment relief provides a mechanism for amending errors or mistakes made in a tax return for a particular accounting period. A claim for overpayment relief can be made where a company has paid, or been assessed for, corporation tax which it believes is not due. The claim must be made to HMRC within four years of the end of the relevant period for the repayment or discharge of tax. If a claim is refused, an appeal may be made in writing to the tribunal within 30 days of the notice of refusal.Exclusions â where overpayment relief claim cannot be madeThe situations where an overpayment claim cannot be accepted are as follows:â˘the mistake is
What is a determination?
What is a determination?Determinations are issued by HMRC where a taxpayer fails to file a tax return. For example, a determination can be raised against an individual for failure to file a self assessment return (SA100) or against a company for failure to file a corporate tax self assessment return (CT600).The determination is based on an HMRC estimate of the amount of tax due. In arriving at an estimate, HMRC will take into account the information that is available to it. For example, HMRC may consider comparable businesses or corporate information.Unless the determination is superseded by a self assessment, it has effect for the purposes of payment of tax, collection and interest on unpaid tax as if it were a self assessment. This means that the due date for payment is the date which would have applied if the return and self assessment had been delivered by the filing date. Issuing a determination also gives HMRC the opportunity to commence formal proceedings for the recovery of the late paid tax.There is no appeal procedure relating to determinations. Once they are raised the taxpayer or the company either needs to accept the determination, and pay the tax shown on the determination, or file a tax return. A determination can only be superseded by an actual self assessment return within the required time limits which are discussed below.It is obviously not good practice to fail to file a tax return, but it should also be noted that in practice HMRC may
Dealing with a determination
Dealing with a determinationIntroductionA determination should be considered a significant failure by a taxpayer to deal with their tax affairs. It should be dealt with promptly and in most cases a taxpayer will require the assistance of an adviser to deal with the determination.Advisers should be aware of the regulations surrounding determinations which are found in the What is a determination? guidance note.At the very least all advisers should be aware that there is no right of appeal against a determination issued by HMRC. A valid determination can only be displaced by the submission of a tax return, which must be submitted within 12 months from the date of the determination. If a return is not filed within this period the determination becomes final. Once the determination becomes final, and the taxpayer is unable to make a claim under the overpayment relief provisions, it may be possible, to submit a special relief claim to displace the determination. Such claims are only accepted in very specific circumstances.Special relief is discussed further below. However, an adviser should consider this as a final course of action, one only to be employed where all other options are exhausted and where HMRC's approach has clearly been unreasonable.DeterminationsDeterminations are raised by HMRC where a taxpayer has failed to file a tax return by the due date. Determinations are discussed in more detail in the What is a determination? guidance note. This note includes what a determination covers, when they are raised and the purpose in
HMRC challenge of a status determination statement
HMRC challenge of a status determination statementIssuing a status determination statement (SDS)As set out in the Off payroll working (IR35) â public sector, large and medium clients â overview guidance note, a client is required as part of the off-payroll working for large / public clients rules to issue a status determination statement (SDS) for all relevant contracts to indicate whether they are inside or outside the rules. This is a complex requirement of the client given that assessing employment status is a complex area of tax based entirely on case law. See the Establishing employment status, Off-payroll (IR35) â the notional contract and Implementing off-payroll working (IR35) for large/public clients guidance notes for more on the technical aspects of employment status and making that assessment. This covers some of the processes that can be put in place in order to make the assessment as low risk as possible.Even when there are robust policies and processes in place, difficulties are likely to arise and HMRC may disagree with the SDS thatâs been issued.Responsibility for operating PAYEWhere HMRC is challenging the SDS, they may not be challenging the issuer of the SDS. Although the SDS is issued by the client, the person being challenged will always be the person responsible for the operation of PAYE which may not be the client.The fee payer will be responsible for the operation of PAYE and this is the person above the intermediary in the supply chain. See the Off payroll working (IR35) â
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