BKLM465000 - Collection and management: payment: transitional provisions

Where the first chargeable period ended on or before Finance Act 2011 received Royal Assent
Where the first chargeable period ends after Finance Act 2011 received Royal Assent

Where the first chargeable period ended on or before Finance Act 2011 received Royal Assent

Regulations 4A and 4B of The Corporation Tax (Instalment Payments) Regulations 1998 - SI1998/3175 (inserted by SI2011/1785)

As the bank levy came into force for chargeable periods ending on or after 1 January 2011, some groups could have chargeable periods that ended prior to the date on which the Finance Act 2011 received Royal Assent (19 July 2011), or applicable accounting dates that ended before that date.

Where this happened, the relevant entity or responsible member had to return the bank levy for one or more accounting period(s) ending prior to the date of Royal Assent. As a result, some, or all, of the bank levy due may have fallen to be paid in instalment payments that fell due before Finance Act 2011 received Royal Assent.

Regulations 4A and 4B deal with this situation and provide that the liabilities for the bank levy in respect of instalment payment dates falling before Royal Assent of the Finance Act are due as follows:

Regulation 4A - for a company that became large by virtue of Regulation 3(1A)

Where a responsible member’s accounting period ended before 19 July 2011 and prior to the Regulations coming into force it was not a large entity (see BKLM461000), it will be required to make payments as follows.

Where there were no further quarterly instalment dates for the accounting period, the total liability of the relevant entity or responsible member was due 30 days after the date on which Finance Act 2011 received Royal Assent, (i.e. it was due on 18 August 2011).

Where there were instalment payments becoming due for that accounting period on or after the 11 August 2011 (the date on which the Regulations came into force), the relevant entity or responsible member was required to pay with the first of those instalment payments an ‘adjustment amount’. The adjustment amount is equal to the aggregate amount of liabilities that would have been due in the instalments falling before 11 August 2011 as if the provisions of Schedule 19 had been in effect.

What this means is that where the relevant entity or responsible member was not paying its Corporation Tax by instalments prior to the Regulations coming into force, the payment in either case will include both the bank levy due and any Corporation Tax that would have been due in instalments that fell before 11 August 2011.

Regulation 4B - for a company that was already large before the Regulations came into force

Where a responsible member’s accounting period ended before 19 July 2011 and prior to the Regulations coming into force it was a large entity, it will be required to make payments as follows.

Where there were no further quarterly instalment dates for the accounting period, the relevant entity or responsible member was required to make a payment of a further amount, the ‘adjustment amount’, 30 days after Finance Act 2011 received Royal Assent.

Where there were instalment payments becoming due for that accounting period on or after 11 August 2011, the relevant entity or responsible member was required to pay in the first of those instalment payments an ‘adjustment amount’.

In both cases the adjustment amount is the difference between:

• the aggregate amount of the instalment payments which were treated as becoming due and payable before 11 August 2011 on the basis that the total liability did not include the bank levy, and
• the aggregate amount of those instalment payments including the liability to the bank levy.

What this means is that where the responsible member was already paying its Corporation Tax via instalments, the amount to be paid as ‘the adjustment amount’ will only relate to the bank levy that would have been due in the instalments that fell before Royal Assent.

Where the first chargeable period ends after Finance Act 2011 received Royal Assent

Regulation 4C and 4D of The Corporation Tax (Instalment Payments) Regulations 1998 (inserted by SI2011/1785)

Where the first chargeable period began before 19 July 2011 but ends after this date some of the bank levy due may have fallen to be paid in instalment payments for an applicable accounting period or periods that fell due before the Regulations came into force on 11 August 2011.

Regulations 4C and 4D deal with this situation and provide that the liabilities for the bank levy in respect of such instalment payments are due as follows:

Regulation 4C - for a company that became large by virtue of Regulation 3(1A)

Where a responsible member’s accounting period began before 19 July 2011 but ends after this date and prior to the Regulations coming into force it was not a large entity (see BKLM461000), it will be required to make payments as follows.

The relevant entity or responsible member was required to pay in the first instalment payment falling on or after 11 August 2011 an ‘adjustment amount’.

The adjustment amount was equal to the aggregate amount of liabilities that would have been due in the instalments falling before 11 August 2011 as if the provisions of Schedule 19 had been in effect.

Regulation 4D - for a company that was already large before the Regulations came into force

Where a responsible member’s accounting period ended before 19 July 2011 and prior to the Regulations coming into force it was a large entity, it will be required to make payments as follows.

The relevant entity or responsible member was required to pay in the first instalment payment becoming due after 11 August 2011 an ‘adjustment amount’.

The adjustment amount is the difference between:

• the aggregate amount of the instalment payments which were treated as becoming due and payable before 11 August 2011 on the basis that the total liability did not include the bank levy,

and

• the aggregate amount of those instalment payments including the liability to the bank levy.

What this means is that where the responsible member was already paying its Corporation Tax via instalments, the amount to be paid as ‘the adjustment amount’ will only relate to the bank levy that would have been due in the instalments that fell before 11 August 2011.

Interest will apply on any amounts that are due under regulations 4A - 4D but which are paid late.

In all cases, any bank levy that is due to be paid in quarterly instalments that fall after the 11 August 2011 is due on the normal instalment payment dates for the accounting period in question.