COM95001 - Payments: quarterly instalment payments: introduction

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

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

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

Many QIP cases have their tax paid through a Group Payment Arrangement. For more information see COM96000 onwards and the Company Taxation Manual (CTM) at CTM92505 onwards.

Large and very large companies have to pay their liability in instalments rather than in one lump sum nine months and one day after the end of the AP. For large companies two of the instalments are normally due before the end of the AP. For very large companies where the accounting period begins on or after 01 April 2019 instalments will be due in months 3, 6, 9 and 12 of their accounting period. 

A company is large if its profits for the AP exceed £1.5 million. A company is very large if its profits for the AP exceed £20 million. These limits are defined in Regulation 3 SI 1998/3175

Notes:

  • Profits mean chargeable profits plus non-group exempt distributions of a qualifying kind.
  • The upper limit is reduced proportionately when the AP is less than 12 months.
  • When the company has associated companies (or for accounting periods beginning between 1 April 2015 and 31 March 2023 51 per cent group companies), the upper limit is reduced by dividing the upper limit by one plus the number of those companies.
  • Sections 18E to 18J CTA 2010 and SI 2022/1203 apply to determine whether another company is another company’s associated company for an accounting period.

For APs ending on or after 1 July 2000, if a company’s total tax liability does not exceed £10,000, proportionately reduced if the AP is less than 12 months, the 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:

  • they were not large in the 12 months preceding the AP except because of this exemption and
  • the profits for this AP do not exceed £10 million.

COTAX cannot apply the ‘companies becoming large’ exemption at Regulation 3 (3) (see Company Taxation Manual at CTM92530), so a proportion of cases that COTAX enters on the Quarterly Payer Review List (QPRW) may escape under that provision. You must consider whether the exemption applies when dealing with cases on this list.

Non-Resident Corporate Landlords (NRCL)

From 6 April 2020, non-resident companies receiving UK property income will be chargeable to Corporation Tax instead of Income Tax on this income.

Where a non-resident company is chargeable to Income Tax on its property income immediately before 6 April 2020 and becomes chargeable to Corporation Tax on 6 April 2020, an accounting period for Corporation Tax purposes will commence on 6 April 2020. The instalment payment regulations will not have effect in relation to that accounting period, meaning that no instalment payments will be needed, regardless whether the company is large or very large.

The instalment payment regime will apply as normal to the next and all subsequent accounting periods. For an example, see CTM92840.

Taxation of Non-Resident Gains on (UK) Immovable Property (TNRGIP)

Overseas registered companies within the TNRGIP legislation will usually have a 1-day AP. If the profit/gain exceeds £27397 (proportionate reduction of £10m limit when AP is less than 12 months) for that 1-day AP the company will be large or very large and so will be liable to pay the tax due by a QIP (Quarterly Instalment Payment).

Where there are associated companies (or for accounting periods beginning between 1 April 2015 and 31 March 2023 51 per cent group companies), the £10 million threshold is divided by one plus the number of associated companies. The number of associated companies to be taken is usually the number existing at the end of the immediately preceding AP. The threshold is also proportionately reduced for short APs. The Company Taxation Manual gives examples at CTM92520 and CTM92530.

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, they may claim repayment under Regulation 6. For more information see COM125060 and CTM92650. Such claims are dealt with by the responsible office.

Top-up payment or payments or a claim to repayment may be made at any time.

Companies that are not large do not have to pay their CT by instalments, but must pay their full liability by the normal due date.

Companies must indicate on their company tax return if they are liable to make instalment payments. This information is captured when the return is submitted. If the return is subsequently unlogged, COTAX automatically changes the ‘QIP’ signal to 'N'.

Debit interest is charged where insufficient tax is paid by the instalment due dates, or instalments are paid late. We pay 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 COM80000 onwards.