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View the related Tax Guidance about Overpayment relief

Paying VAT

Paying VATThis guidance note provides an overview of how to pay HMRC VAT that is due and when it must be paid.Please see the Guide to completing a UK VAT return and Flat rate scheme (FRS) 鈥� operating the scheme guidance notes for information on how to complete and submit a VAT return. Making a VAT paymentIn order to reduce the risk of incurring interest and penalty charges it is important to know how to pay HMRC VAT that is due and when it must be paid. Guidance regarding these points is provided under separate headings in this guidance note.What are the ways to pay VAT?The table below provides a summary of ways to pay VAT to HMRC and includes links to HMRC guidance.VAT payment methodHMRC guidanceDirect debitPay VAT direct debitVAT instruction to your bank or building society to pay by direct debit VATC9Approving a payment through an online bank accountPay VAT approve payment through your online bank accountBank transferPay VAT bank detailsPaying online by debit or corporate credit cardPay VAT by debit or credit card onlinePaying at a bank or building societyPay VAT bank or building societyStanding order if the business uses the annual accounting scheme or is required to make payments on account Pay VAT standing

Repayment of and interest on tax overpaid by companies

Repayment of and interest on tax overpaid by companiesA harmonised regime is in place in respect of interest accrued on late payments of tax and on the refund of overpayments of tax. It was originally intended that the harmonised interest regime would apply across all taxes; however, to date, corporation tax remains outside its scope. Nonetheless, the current formula for determining the rates applicable to overpaid corporation tax and the rate for those taxes and duties within the harmonised interest regime is the same (see below). The current and historic rates of interest applied by HMRC to refunds of corporation tax are provided on the GOV.UK website. See Simon鈥檚 Taxes A4.629 for a list of taxes and duties covered by the interest rules and their respective commencement dates.The rules applicable to late and underpaid tax are set out in the Interest on tax underpaid by companies guidance note.When is interest payable by HMRC?The most common scenario in which interest is paid to a company by HMRC is where the corporation tax liability of a company has been paid early or where an overpayment of corporation tax has been made. However, a payment of interest can also arise to companies in respect of the following:鈥�repayment of income tax deducted at source鈥�payment of an R&D tax credit鈥�payment of a land remediation tax credit鈥�payment of a credit arising from a claim for one of the creative sector tax reliefs, such as the film tax credit鈥�carry back of

Self assessment 鈥� amendments and corrections

Self assessment 鈥� amendments and correctionsOnce a self assessment tax return has been filed, both HMRC and the taxpayer (or the agent) has the right to make changes to the return. There are different time limits depending on whether it is a correction by HMRC or an amendment made by the taxpayer.This framework has been the subject of various calls for evidence and consultations since 2018 as HMRC seeks to align the rules across taxes. See the consultation published in October 2024 entitled 鈥楾he Tax Administration Framework Review 鈥� new ways to tackle non-compliance鈥�.Correction of the tax return by HMRCHMRC has the right to amend the tax return within nine months of the date of receipt (ie the date the return was filed rather than the due date for filing) without opening an enquiry. Usually, HMRC does this to eliminate or to reverse any obvious errors or mistakes within the return. These are usually arithmetical errors, although HMRC can reverse any technical mistakes made by the taxpayer in completing the return. HMRC will notify the taxpayer of any amendments made. The agent should receive a copy of this notification. The taxpayer is not bound to accept the correction. The correction can be rejected within 30 days of the date the notice was issued by HMRC (ie not the date of receipt of the notice). If the agent needs to reject the correction, it is suggested they do so in writing, stating the reason(s) they believe the correction is incorrect.

Company tax returns 鈥� making claims

Company tax returns 鈥� making claimsThere are a number of claims which may be made in a company tax return (or the relevant supplementary pages), including the following:鈥�utilisation of a company鈥檚 own losses鈥�surrender / relief of losses between group companies鈥�claims for capital allowances鈥�claims for research and development tax relief (RDEC or the repayable credit) 鈥� see the R&D tax relief administration, interaction with other reliefs and anti-avoidance guidance noteFA 1998, Sch 18, Pt VII, para 54Claims may be amended within the normal time limit, which is 12 months following the usual filing date. See the Making amendments to company tax returns guidance note for further details about the process to follow.Other claims not made on a CT600 (company tax return) include overpayment relief and special relief. These are covered in more detail below.Note that a consultation on the tax administration framework published in October 2024 may mean that some claims may require supporting information and be subject to more HMRC scrutiny in the future before the claim is processed. It would seem that this is primarily aimed at claims that result in a tax repayment.Overpayment relief claimsOverpayment relief provides a mechanism for amending errors or mistakes made in a tax return for a particular accounting period. A claim for overpayment relief can be made where a company has paid, or been assessed for, corporation tax which it believes is not due. The claim must be made to HMRC within four years of the end of

What is a determination?

What is a determination?Determinations are issued by HMRC where a taxpayer fails to file a tax return. For example, a determination can be raised against an individual for failure to file a self assessment return (SA100) or against a company for failure to file a corporate tax self assessment return (CT600).The determination is based on an HMRC estimate of the amount of tax due. In arriving at an estimate, HMRC will take into account the information that is available to it. For example, HMRC may consider comparable businesses or corporate information.Unless the determination is superseded by a self assessment, it has effect for the purposes of payment of tax, collection and interest on unpaid tax as if it were a self assessment. This means that the due date for payment is the date which would have applied if the return and self assessment had been delivered by the filing date. Issuing a determination also gives HMRC the opportunity to commence formal proceedings for the recovery of the late paid tax.There is no appeal procedure relating to determinations. Once they are raised the taxpayer or the company either needs to accept the determination, and pay the tax shown on the determination, or file a tax return. A determination can only be superseded by an actual self assessment return within the required time limits which are discussed below.It is obviously not good practice to fail to file a tax return, but it should also be noted that in practice HMRC may

Weekly case highlights 鈥� 14 October 2024

Weekly case highlights 鈥� 14 October 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Tax administrationE v HMRCThe taxpayer here had kept no business records and had failed to notify HMRC of his liability for almost two decades. Not surprisingly, the tribunal accepted that HMRC had made a discovery of income which had not been assessed and confirmed (with some minor adjustments) the assessments which had been raised.The real interest in the case is the application for anonymity. The appellant argued, as one of his grounds of appeal, that he was being financially assisted by family in a country with a poor record regarding human rights and which has been known to take action against residents who provide support to family members in countries such as the UK. He was concerned that there would be significant risk to his family in that country if the decision was not anonymised.The tribunal accepted his argument: it considered that there would be a clear and significant risk to the safety of his family overseas if the appeal was held in public. As a result, the appeal was heard in private and the decision published with the taxpayer鈥檚 details anonymised. Butt v HMRCThis is a strange case. HMRC had

Tolley鈥檚 monthly tax case tracker

Tolley鈥檚 monthly tax case trackerThis tax tracker tool displays the current status and most recent developments of direct tax cases being heard by the Upper Tribunal (UT), the Court of Appeal, the Court of Session, the Supreme Court and the EU Court of Justice as at 21 March 2025. It is updated on a rolling monthly basis.The tracker is split into three parts:鈥�Cases subject to an appeal鈥�Cases potentially subject to an appeal, and鈥�Finalised tax casesCases subject to an appealThis section of the tracker shows cases that are currently subject to an appeal.Name of parties and citationCurrent statusA D Bly Groundworks and Civil Engineering Limited v HMRCCA/2024/001410; [2024] UKUT 104 (TCC); [2021] UKFTT 445 (TC)Subject: Corporation tax 鈥� provision for pensions liabilitiesStatus: Taxpayers鈥� appeal to the Court of Appeal scheduled to be heard by 19 September 2025Background: The taxpayers were lead appellants in a group of appeals by companies who implemented a tax avoidance scheme, notified under DOTAS, to reduce their profits chargeable to corporation tax. The taxpayers implemented an Unfunded Unapproved Retirement Benefit Scheme (UURBS): a contractual arrangement under which they promised to provide pensions to directors and other key employees in the future. The taxpayers set the pensions at 80% or 100% of their estimated profits before tax. The taxpayers made provisions in their accounts in respect of their liability to make pension payments in the future and claimed corresponding corporation tax deductions. The FTT found that the

Weekly case highlights 鈥� 11 November 2024

Weekly case highlights 鈥� 11 November 2024These are our brief notes and thoughts on cases published in the last week or so which caught our eye and are likely to be of particular interest to tax practitioners. Full case reports and commentary on most of these cases will be included within our normal reference sources in the coming weeks.Business TaxSyngenta Holdings v HMRCThis is another in the recent line of cases on the unallowable purpose test in the loan relationships regime. The transaction in question was a fairly straightforward intra-group reorganisation where the sale of one company to another group company was funded in part by debt. The question was whether the interest payable on that debt was deductible or whether it was incurred for an unallowable purpose, in which case no deduction would be available. The company incurring the interest obtained no tax benefit itself 鈥� the benefit was at group level because the interest deduction was offset against the liabilities of another group company.The decision discloses a vast amount of documentation relating to the project, including internal briefing notes and correspondence with advisers. This shows that from the beginning taxation was a vital element of the reorganisation. Indeed the first documentary evidence of the transaction was on a spreadsheet headed 2010 UK tax projects. Although the directors of the company attempted, when giving evidence, to downplay the importance of tax to the project the tribunal was firmly of the view that this was a tax-driven transaction. Its

Dealing with a determination

Dealing with a determinationIntroductionA determination should be considered a significant failure by a taxpayer to deal with their tax affairs. It should be dealt with promptly and in most cases a taxpayer will require the assistance of an adviser to deal with the determination.Advisers should be aware of the regulations surrounding determinations which are found in the What is a determination? guidance note.At the very least all advisers should be aware that there is no right of appeal against a determination issued by HMRC. A valid determination can only be displaced by the submission of a tax return, which must be submitted within 12 months from the date of the determination. If a return is not filed within this period the determination becomes final. Once the determination becomes final, and the taxpayer is unable to make a claim under the overpayment relief provisions, it may be possible, to submit a special relief claim to displace the determination. Such claims are only accepted in very specific circumstances.Special relief is discussed further below. However, an adviser should consider this as a final course of action, one only to be employed where all other options are exhausted and where HMRC's approach has clearly been unreasonable.DeterminationsDeterminations are raised by HMRC where a taxpayer has failed to file a tax return by the due date. Determinations are discussed in more detail in the What is a determination? guidance note. This note includes what a determination covers, when they are raised and the purpose in

HMRC challenge of a status determination statement

HMRC challenge of a status determination statementIssuing a status determination statement (SDS)As set out in the Off payroll working (IR35) 鈥� public sector, large and medium clients 鈥� overview guidance note, a client is required as part of the off-payroll working for large / public clients rules to issue a status determination statement (SDS) for all relevant contracts to indicate whether they are inside or outside the rules. This is a complex requirement of the client given that assessing employment status is a complex area of tax based entirely on case law. See the Establishing employment status, Off-payroll (IR35) 鈥� the notional contract and Implementing off-payroll working (IR35) for large/public clients guidance notes for more on the technical aspects of employment status and making that assessment. This covers some of the processes that can be put in place in order to make the assessment as low risk as possible.Even when there are robust policies and processes in place, difficulties are likely to arise and HMRC may disagree with the SDS that鈥檚 been issued.Responsibility for operating PAYEWhere HMRC is challenging the SDS, they may not be challenging the issuer of the SDS. Although the SDS is issued by the client, the person being challenged will always be the person responsible for the operation of PAYE which may not be the client.The fee payer will be responsible for the operation of PAYE and this is the person above the intermediary in the supply chain. See the Off payroll working (IR35) 鈥�