CTM92690 - CTSA: quarterly instalments: SA recorded

Companies must indicate on their company tax return if they are liable to make quarterly instalment payments.

When the return details are captured, the quarterly instalment payments (QIP) signal held in COTAX for the accounting period changes to ‘V’, ‘L’ or ‘N’ to reflect the entry (or absence of it) in the ‘quarterly instalment payments’ boxes in the return form.

Initially, therefore, computer action is based on the company’s analysis of the ‘QIP’ status.

• If the company says in its return that it should have made quarterly instalment payments, COTAX calculates debit and credit interest on that basis, irrespective of the size of the profits or tax charge shown in the return.
• If the company does not say that it should have made quarterly instalment payments, COTAX assumes that it was not liable to do so. It calculates any credit interest accordingly, irrespective of the size of the profits or tax charge shown in the return.
• However, COTAX also reviews each return to ensure that cases which appear to be QIPs cases, but do not have the ‘V’ or ‘L’ signal set, are considered. It does this by checking the level of profits, tax payable and number (if any) of associated/related 51% group companies. Any apparent QIP cases are put on the Quarterly Payer Review List (QPRW).

COTAX also puts onto the QPRW cases which do not appear to be QIP cases, based on the level of profits, tax payable and number (if any) of associated companies.

Review entries on the QPRW as part of the review of a company’s return. See the COTAX Manual (COM) in the business area ‘Payments’ for guidance on dealing with cases on the QPRW.

COTAX cannot apply the ‘special cases’ exemption at REG3 (3) (see CTM92530), so a fairly high proportion of cases that COTAX ‘thinks’ should be quarterly instalment payers may escape under that provision.

HMRC does not regard correspondence about a company’s ‘QIP’ status of itself as a ‘SA’ enquiry within FA98/SCH18/PARA24 - see the Enquiry Manual.