OT21805 - Energy Profits Levy: Administration of EPL: EPL as an amount of CT  

EPLA22\S11 & Sch2

To make use of the existing administrative framework that customers are familiar with, EPL is treated as an amount of CT for collection and management purposes. This means that existing rules governing CT administration apply equally to EPL as they do to CT, including:

  • returns

  • payments
  • enquiries
  • assessments
  • information powers

  • penalties

  • interest
  • appeals

The relevant legislation (such as FA98\SCH18 and TMA70) should be applied to EPL as it is to CT, subject to any necessary modifications. Further information on instalment payments can be found below.

EPLA22\Sch2 sets out the consequential amendments to FA98\SCH18 and TMA70\Part5A.

Additional boxes will be included in the form CT600 to indicate the levy profits chargeable and the liability.

Instalment payments

OT21300 sets out the rules for the payment of RFCT and SC in three instalments for large companies. EPLA22\Sch2 brings EPL into the Instalment Payments Regulations.

Under these rules, a company with a normal 12-month accounting period pays its RFCT, SC and EPL in equal instalments as follows:

  • 1st instalment - 6 months and 13 days from the start of the accounting period

  • 2nd instalment - 3 months from the first instalment due date

  • 3rd instalment - 14 days from the end of the accounting period

Instalment payments for straddling periods

The EPL commenced on the 26th May 2022 meaning that most companies will have an accounting period which straddles the start date of the levy.

Section 15 states that so much of the straddling period as falls before the start date, and so much of the straddling period as falls on or after that date, are treated as separate accounting periods.

In the case of a straddling period, the Instalment Payments Regulations 1998 apply separately— (a) in relation to the levy, and (b) in relation to any other tax chargeable on the company.

Therefore, for the purposes of the levy a new accounting period begins on 26 May 2022. The first instalment of EPL is due 6 months and 13 days from that date. The technical note issued 26 May 2022 set out how the levy was intended to operate. This note advised that, for accounting periods that straddle the commencement day, the levy payment for that straddling period will be made in the final instalment payment. This was to deal with the situation where an instalment payment may have become due before the Bill received Royal Assent. As the Bill progressed, this was no longer a risk and therefore this was removed.

Example

AP 1 Jan 22 to 31 Dec 2022 – RFCT instalment payment dates are:

14 July 2022

14 October 2022

14 January 2023

Deemed separate AP 26 May 22 to 31 Dec 2022 - EPL instalment payment dates are:

9 December 2022

14 January 2023

These dates are because it is a short accounting period and therefore, the first payment is due 6 months and 13 days from the start of the AP and the final payment is due 14 days from the end of the accounting period unless the final instalment date falls earlier than the 6 months and 13 days date. In that case, the payment is due on the final instalment date.