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Tax payments and interest |
See Also
Adjustment of profit | CTSA interest option under the Tools menu | Information for the return | Payments on account | S Schedules - Overview | Tax rates
Select from the following headings:
Background | Developing the schedule | Completing the Schedule | Standard Sub-Schedules | Carry Forward | Related Errors
Under the CTSA regulations, large companies are required to make payments on account of their corporation tax liability in instalments in advance of the normal due date based on the company's estimate of its liability. Any underpayment or overpayment is adjusted when the company tax return and self-assessment are delivered.
The Tax payments and interest schedule displays the liability arising, broken down as payments on account and the balancing payment. The relevant percentages and the dates the payments are due are derived and listed by the system with reference to the period end. Details of any payments entered on the payments on account projection schedules in the prior period computation will be brought forward automatically to this schedule (see below). This schedule has also been enhanced to deal with tax payments and surrenders under CTA 2010, s963 , which are taken account in any interest calculation.
From FY 2005 onwards this schedule has been enhanced to deal with the accelerated payments for oil ring fence trades. If using the Ring Fence Company within the software it will automatically split the corporation tax and supplementary charge due on ring fence profits from the other profits and calculate the appropriate payment dates. In the normal single trade version you must set a ring fence flag on the P schedule and enter the NRF tax on the O schedule.
An additional column has been added to denote whether payments are ring fence (RF) or not.
Note: if payments are made on a group-wide basis by the nominated company using the Allocation of group payments schedule within the Group module, then this schedule should not be completed, as per the review point at the foot of the schedule.
This schedule is a master schedule for FY2000 and subsequent periods. For prior periods, where the CTSA regulations apply, the schedule should be developed from the A schedule using the command Develop, Tax, Payments on account.
Where the user develops the Tax payments and interest schedule, this automatically creates a series of S schedules, which allow for estimation of profits and payments on account for the next accounting period. The S schedules are also generated for the last accounting period before the CTSA provisions become effective so that an estimate for 31 December 1999 can be prepared from within the 31 December 1998 computation. These schedules are designed to allow quick and accurate calculations with as much or little detail as is desired. See the section, S Schedules, for further details on each of the S schedules generated.
The user should insert additional rows for further payments as necessary using the Ins key in the area below the payment dates automatically computed by the system. This is indicated by the data entry cell.
Note: the user should only enter information in the data entry cells in respect of the date and amount of each payment/receipt. Firstly, use the date picker to select the date on which the payment was made. Then enter the payment in the data-entry cell to the right of the payment date, in the column marked Amount paid/(repaid). When completing this schedule, care should be taken not to over-type any of the formulae that are already present.
The Sortrows button should be used to reorder the payments chronologically, as described below.
Some of the schedule features are described in more detail.
Amount paid/(repaid)
The user should enter the amount of the payment in the Amount paid/(repaid) column. The system will calculate the cumulative under or overpaid position of the company in the adjacent Over/(under) Paid column.
Interest (payable)/receivable
The Interest (payable)/receivable amounts are computed based on the
number of days the balance is outstanding and the interest rate prevailing.
Note: to reflect HMRC practice, the way in which interest is calculated
is with reference to the day after the start date to the end date inclusive. Daily interest rates are calculated using 366 days for interest owed to HMRC and 365 for interest owed to the taxpayer. This follows HMRC practice and gives a very small benefit to the taxpayer.
The interest rates themselves may be maintained using the Tools, CTSA interest menu bar option. A different set of interest rates applies to the quarterly payments (Under/Over payments per the CTSA interest menu), as opposed to payments/repayments due at the 9 month and 1 day period end interval (Late under payments/Late repayments). See the Tools menu.
Interest to date
This column calculates the interest that has accrued up to today's date. For newly created FY2003 computations and later periods the calculation will continue to run for dates after 9 months and a day from the period end. For earlier periods the calculation is limited to that date.
Sort rows
The Sort rows button will then reorder the dates chronologically so that each payment/receipt is matched against the installment liability, and appears on the line below the due dates derived by the system.
Closing date for group payment arrangements
The closing date is defined in the Revenue's standard contract for entry into group payment arrangements, clause 1(1) - broadly, it is the latest filing date for any of the companies involve. Where this has been entered in the Group module, if tax payments are undertaken by the nominated group company on the Allocation of group payments schedule, this field will automatically be completed when the Group Update routine is run.
CTA 2010, s963 tax payment claims/surrenders
Surrenders/claims of tax payments made under CTA 2010, s963 have now been incorporated as part of the company Tax payments and interest schedule and are therefore accounted for within any interest calculation.
Tax payment surrenders
For tax payment surrenders, you should enter the date on which the payment was made, the amount surrendered with a leading minus and sort the rows in the usual way .
The user should then use the FA89 s102 deemed payment selector flag at the right hand side of this schedule to indicate that this as an amount surrendered (the default setting is set to No).
You should enter each tax payment surrender on a separate row to any other payment.
This total surrendered by the company should also be entered in the data entry cell located at the foot of the A schedule, which in turn feeds through to the Amount paid/(repaid) column on the Tax payments and interest schedule.
Tax payment claims
The process should be repeated for tax payment claims made under CTA 2010, s963 , entering the receipt as a positive amount on the Tax payments and interest schedule, and as a negative figure in the relevant data entry cell on the A schedule.
Note: where the Group module Tax payments table schedule has been used to allocate claims/surrenders of tax payments inter group, a series of error messages may arise. These may be cleared by:
Oil Ring Fence Accelerated payments
If using the Ring Fence Company option the software will automatically calculate the payment dates. However, if using the trading company option then a selector needs to be set on the P Schedule to denote that this is an oil ring fence company. Additionally, on the O schedule it is necessary to enter the amount of tax due on non ring fence profits so that the software can calculate the appropriate instalment dates for that tax in addition to the instalment dates for the tax on ring fence profits.
This schedule has no standard sub-schedules.
On carry forward, this schedule is automatically developed in the subsequent computation.
Error | How to solve it |
| Do not enter liabilities | The tax liabilities do not need to be entered on this schedule as the software calculates them automatically. |
| Do not enter payments | Payments of the tax liability should not be entered opposite the date that they were due to be paid. Instead insert a row and enter the date and amount there. |
| FA 89 s102 amounts do not agree | It is possible for this error to appear if the correct sign convention has not been used when entering the s102 payments. Try entering the s102 amount on the A schedule first (where the sign convention should be obvious) and then enter it onto the payments schedule on a newly inserted line. Then set the FA89 s102 deemed payment selector flag at the end of the line as appropriate. |
© 2009 Thomson Reuters.