The Corporation Tax (Instalment Payments) Regulations 1998

These Regulations may be cited as the Corporation Tax (Instalment Payments) Regulations 1998 and shall come into force on 7th January 1999.

These Regulations have effect in relation to accounting periods of companies ending on or after 1st July 1999.

In these Regulations—

• “accounting period” shall be construed in accordance with Chapter 2 of Part 2 of CTA 2009;

• “applicable accounting period” means any accounting period for which bank levy is chargeable in respect of the chargeable period determined in accordance with—

  1. (a)

     paragraph 50 of Schedule 19 where bank levy is charged in relation to a relevant group; or

  2. (b)

     paragraph 51 of that Schedule where bank levy is charged in relation to a relevant entity;

• F2“large company” has the meaning given by regulation 3(1) or 3A (as the case may be);

• F3...

• “Schedule 18” means Schedule 18 to the Finance Act 1998;

• “Schedule 19” means Schedule 19 to the Finance Act 2011;

• “the bank levy” means the tax charged in accordance with Schedule 19;

• “the chargeable period” has the meaning given by paragraph 4 or paragraph 5 of Schedule 19 (as the case may be);

• “the relevant entity” has the meaning given by paragraph 5 of Schedule 19;

• “the relevant group” has the meaning given by paragraph 4 of Schedule 19;

• “the responsible member” has the meaning given by paragraph 54 of Schedule 19;

• “the Management Act” means the Taxes Management Act 1970; F4...

• F5“the Taxes Act” means the Income and Corporation Taxes Act 1988;

• F6“very large company” has the meaning given by regulation 3(2) or 3A (as the case may be).

References in these Regulations to profits of a company in any accounting period are references to the company’s augmented profits within the meaning given by section F7sections 18L and 18M of CTA 2010.

The rules in Part 3A of CTA 2010 (see sections 18E to 18J) which apply for determining whether a company is another company's associated company in an accounting period for the purposes of section 18D of that Act apply for the purposes of these Regulations.

F9Except as provided by regulation 3A, references in these Regulations to the total liability of a company for an accounting period are references to the amount of tax payable for that period by the company as calculated in accordance with paragraph 8(1) of Schedule 18.

Subject to paragraphs (3) to (5), a company (other than a relevant entity or a responsible member) is a large company by virtue of this regulation in respect of an accounting period if its profits in that period exceed £1.5 million but do not exceed £20 million.

Subject to paragraphs (3) and (4), a company (other than a relevant entity or a responsible member) is a very large company by virtue of this regulation in respect of an accounting period if its profits in that period exceed £20 million.

The amounts of profits specified in paragraphs (1) and (2) are subject to the provisions in paragraphs (8) and (10).

A company is not in respect of an accounting period—

if its total liability for the period does not exceed £10,000 (or such amount as applies by virtue of paragraph (10)).

A company is not in respect of an accounting period (“AP”) a large company by virtue of this regulation where the profits of the company in AP do not exceed £10 million (or such amount as applies by virtue of paragraphs (8) and (10)) and—

Paragraph (8) applies where a company has one or more related F2associated companies in an accounting period.

For the purposes of this regulation, the number (“N”) of related associated companies of a company in an accounting period (“AP”) is to be determined—

Where this paragraph applies by virtue of paragraph (6), whether a company is (or is not) a large company or a very large company in respect of an accounting period by virtue of this regulation is to be determined with the following modifications—

but the amounts in sub-paragraphs (a), (b) and (c) are subject to the provisions in paragraph (10).

Except where paragraph (4) applies, whether a company is (or is not) a large company or a very large company by virtue of this regulation is to be determined as it would have been determined apart from sections 330 (supplementary charge in respect of ring fence trades) and 331 (meaning of “financing costs” etc) of CTA 2010 F3and apart from the provision made by the Energy (Oil and Gas) Profits Levy Act 2022.

Where an accounting period is a period of less than 12 months F4and paragraph (11) does not apply, whether a company is (or is not) a large company or a very large company in respect of that period by virtue of this regulation is to be determined by making a proportionate reduction to the following amounts—

A company which—

is to be treated for the purposes of these regulations as if it were a large company by virtue of paragraph (1).

This regulation applies where a company is a relevant entity or a responsible member.

Subject to paragraphs (4) to (7), a company is a very large company by virtue of this regulation in respect of an accounting period if its profits in that period exceed £20 million.

A company which is not a very large company in respect of an accounting period by virtue of paragraph (2) is a large company in respect of that period.

A company is not in respect of an accounting period a very large company by virtue of paragraph (2) if its total liability for the period does not exceed £10,000 (or such amount as applies by virtue of paragraph (7)).

Where in an accounting period a company has one or more F2associated companies, whether the company is (or is not) a very large company by virtue of this regulation in respect of that period is to be determined by substituting in paragraph (2) “£20 million/1+N” for “£20 million”.

The amount of “£20 million/1+N” in paragraph (5) is subject to paragraph (7).

Where an accounting period is a period of less than 12 months, whether a company is (or is not) a very large company in respect of that period by virtue of this regulation is to be determined by making a proportionate reduction to the following amounts—

For the purposes of this regulation—

Save as regards any amount falling within regulation 4(1)(b), (2)(b) F1, (3)(b) or regulation 5A, amounts in respect of the total liability of a large company for an accounting period shall be treated as becoming due and payable as follows.

Subject to paragraph (4), the amount of the company’s total liability for that period or, as the case may be, the specified percentage amount shall be treated as becoming due and payable in instalments (not exceeding four) on the dates specified in paragraph (3).

The first instalment payment shall be treated as becoming due and payable on the date which is six months and thirteen days from the start of the accounting period.

• The final instalment payment shall be treated as becoming due and payable on the date which is three months and fourteen days from the end of the accounting period.

• An additional instalment payment or additional instalment payments shall, where the length of the accounting period so allows, each be treated as becoming due and payable on the date which is three months after the date of the immediately preceding instalment payment.

Where the length of the accounting period is such that the date which is three months and fourteen days from the end of the accounting period falls earlier than the date which is six months and thirteen days from the start of the accounting period, the amount of the company’s total liability for that period or, as the case may be, the specified percentage amount shall be treated as becoming due and payable on the date which is three months and fourteen days from the end of the accounting period.

Where in accordance with paragraph (2) amounts in respect of the amount of the company’s total liability for an accounting period or in respect of the specified percentage amount are treated as becoming due and payable in instalments, the amount treated as becoming due and payable on any instalment payment date shall be calculated in accordance with paragraphs (6) to (8) and by reference to the formula—

where—

• CTI is the amount of the company’s total liability for that accounting period or the specified percentage amount F2less any amounts falling within regulation 5A(1), and

• n is the number of whole months falling within that accounting period plus the appropriate decimal.

The amount treated as becoming due and payable on the first instalment payment date is the smaller of CTI and the amount resulting from the formula specified in paragraph (5).

The amount treated as becoming due and payable on each subsequent instalment payment date other than the final instalment payment date is the smaller of—

The amount treated as becoming due and payable on the final instalment payment date is the balance of the company’s total liability for that accounting period or of the specified percentage amount carried forward from the immediately preceding instalment payment date.

In this regulation—

• “the appropriate decimal” is a decimal, calculated to two places rounded arithmetically where necessary, representing the number of days in the accounting period falling outside the whole months falling within that period and corresponding to the fraction of which the numerator is the number of those days and the denominator is 30;

• “the specified percentage amount” means an amount equal to the percentage specified in regulation 4(1)(a), (2)(a) or (3)(a), as the case may be.

Except in respect of any amount falling within regulation 5AZC or 5A, amounts in respect of the total liability of a very large company for an accounting period are due and payable on the following days.

Where the accounting period is 12 months—

Where the accounting period is less than 12 months, steps 1 to 5 apply instead of paragraph (2).

Step 1 is to determine if the accounting period ends—

Step 2 is to determine if the day found under step 1 falls on or before the first day of the accounting period and—

Step 3 is to determine if the day (“D1”) which falls 2 months and 13 days after the first day of the accounting period falls on or after the final instalment day and—

Step 4 is to determine if the day (“D2”) which falls 3 months later than instalment 1 day falls on or after the final instalment day and—

Step 5 is to determine if the day (“D3”) which falls 3 months later than instalment 2 day falls before the final instalment day and only if it does is an instalment due on D3 (“instalment 3 day”).

The amount (“CTI”) which comprises a very large company’s total liability for an accounting period (less any amount falling within regulation 5AZC or 5A) is due and payable on the instalment days set out in this regulation.

Where the only instalment day applies, all of CTI is due and payable on that day.

The amount due and payable on, if applicable—

In paragraph (3)—

• “B” means the amount of CTI required to be paid on each previous instalment day; and

• “the formula amount” means the amount produced by—

  $$3x(CTI/(wm+wmd))$$

  where—

  • “wm” is the number of whole months falling within the accounting period;

  • “wmd” is the decimal (calculated to two places rounded arithmetically where necessary) of the fraction R/30, where “R” is the number of days in an accounting period outside the whole months represented by “wm”.

In this regulation the days listed in paragraph (6) have the same meaning in this regulation as they have in paragraph (2) or paragraphs (5) to (8), as the case may be, of regulation 5AZA, and “instalment days” in paragraph (1) means any of those days.

The days referred to in paragraph (5) are—

• “the final instalment day”;

• “instalment 1 day”, “instalment 2 day” and “instalment 3 day”; and

• “the only instalment day”.

A very large company’s total liability for an accounting period for bank levy is due and payable as provided by paragraphs (3) to (9) of regulation 5, but with the following modifications of paragraphs (5) and (6) of that regulation.

The modifications referred to in paragraph (1) are—

This regulation applies to amounts in respect of the liability to corporation tax F2, supplementary charge and energy (oil and gas) profits levy in relation to the ring fence profits F3, adjusted ring fence profits and levy profits of a large company F4or very large company for an accounting period (“the ring fence amount”).

The ring fence amount shall be treated as becoming due and payable in instalments (not exceeding three) on the dates specified in paragraph (3).

The first instalment payment shall be treated, subject to paragraph (4), as being due and payable on the date which is six months and 13 days from the start of the accounting period.

Where the length of the accounting period is such that the date which is 14 days from the end of the accounting period falls earlier than the date which is six months and 13 days from the start of the accounting period, the ring fence amount shall be treated as becoming due and payable on the date which is 14 days from the end of the accounting period.

Where in accordance with paragraph (2) ring fence amounts are treated as becoming due and payable in instalments, the amount treated as becoming due and payable on any instalment payment date shall be calculated in accordance with paragraphs (6) to (8) and by reference to the formula—

• where—

• RFA is the ring fence amount, andn is the number of whole months falling within that accounting period plus the appropriate decimal.

The amount treated as becoming due and payable on the first instalment payment date is the smaller of RFA and the amount resulting from the formula in paragraph (5).

The amount treated as becoming due and payable on any subsequent instalment payment date other than the final instalment payment date is the smaller of—

The amount treated as becoming due and payable on the final instalment payment date is the balance of the company’s ring fence amount for that accounting period carried forward from the immediately preceding instalment payment date.

In this regulation—

• “adjusted ring fence profits” has the meaning given in section F7330(2) of CTA 2010;

• “the appropriate decimal” is a decimal, calculated to two places rounded arithmetically where necessary, representing the number of days in the accounting period falling outside the whole months falling within that period and corresponding to the fraction of which the numerator is the number of those days and the denominator is 30;

• F8“energy (oil and gas) profits levy” has the same meaning as in the Energy (Oil and Gas) Profits Levy Act 2022;

• “levy profits” has the same meaning as in the Energy (Oil and Gas) Profits Levy Act 2022;

• “ring fence profits” has the meaning given in section F9276 of CTA 2010;

• “supplementary charge” means the charge imposed by section F10330(1) of CTA 2010.

Paragraphs (3) and (4) apply if on or after 31st March 2011 there is a relevant amendment—

In relation to E and, where relevant, any other chargeable member a relevant amendment is an alteration to—

the main purpose, or one of the main purposes, of which is to obtain a tax advantage.

Where this paragraph applies for the purposes of ascertaining the dates on which instalment payments are treated as becoming due and payable in accordance with F2regulation 5 or 5AZC, the applicable accounting period of the entity that is the responsible member in relation to the chargeable period is to be treated as beginning and ending on the dates on which the chargeable period begins and ends (“the assumption”).

Where paragraph (3) applies, the assumption will apply in relation to any applicable accounting periods that relate to a subsequent chargeable period where there is no chargeable member which meets the requirements of paragraph 54(3) or (5) of Schedule 19.

In this regulation—

• “tax advantage” has the same meaning as in section 1139 of CTA 2010; and

• “the chargeable member” has the meaning given by paragraph 54(2) of Schedule 19.

This regulation applies where a large company F1or very large company—

The company may, by notice given to an officer of F3Revenue and Customs, make a claim to an officer of Revenue and Customs for the repayment of so much of the aggregate amount so paid as in the company’s view exceeds the revised aggregate amount.

The notice under paragraph (2) must state—

If the company has appealed against an amendment of an assessment, or an assessment, in respect of the amount of its total liability for the accounting period concerned, and the appeal has not been finally determined, it may apply to the F4tribunal to whom the appeal stands referred for a determination of the amount which should be repaid to the company pending determination of the amount of its total liability for that accounting period.

Any claim under paragraph (2) or application under paragraph (4) is to be subject to the relevant provisions of Part 5 of the Taxes Management Act 1970 (see, in particular, section 48(2)(b) of that Act).

If the company makes an application under section 55(3)^f1 or (4) of the Management Act (application to postpone payment pending determination of appeal), that application may be combined with an application under paragraph (4).

In paragraph (1)(b) “the relevant date” means the date on which a claim under paragraph (2) is made.

Section 59DA of the Management Act (claim for repayment in advance of liability being established) shall not apply in any case where this regulation applies.

This regulation applies where—

Any payment made by E in respect of that applicable accounting period shall be treated—

Whether there has been an underpayment of E’s total liability shall be ascertained in accordance with the provisions of Schedule 18.

Section 87A^f1 of the Management Act shall apply in relation to any unpaid amount in respect of the total liability of a large company F1or a very large company for an accounting period, with the modifications specified in paragraphs (2) to (5).

After subsection (1) there shall be inserted the following subsection—

“(1A)

An amount or amounts treated as becoming due and payable in respect of the total liability of a large company F2or a very large company for an accounting period in accordance with the Corporation Tax (Instalment Payments) Regulations 1998 shall carry interest at the rate applicable under section 178 of the Finance Act 1989^f2 from the date or dates specified in F3the regulation in question as the date or dates when that amount or those amounts are treated as becoming due and payable until payment.”

In subsection (2)—

In subsection (3) there shall be added at the end the words “, and the reference in subsection (1A) above to the date or dates when an amount or amounts are treated as becoming due and payable in respect of the total liability of a large company F4or a very large company for an accounting period is a reference to the date or dates when that amount or those amounts are treated as having become due and payable by the company”.

After subsection (9) there shall be added—

“(10)

In subsections (1A) and (3) above “large company” F5and “very large company” have the meanings given in the Corporation Tax (Instalment Payments) Regulations 1998.”

Section 826 of the Taxes Act^f1 shall apply in relation to—

with the modifications specified in paragraphs (2) and (3).

In subsection (1)—

After subsection (3) there shall be inserted—

“F12(3ZA)

In relation to an excess amount in respect of a company’s total liability arising as mentioned in subsection F13(1)(ca) above, the material date is the F14earliest date on which an instalment payment for the accounting period concerned is treated as becoming due as mentioned in F15... the Corporation Tax (Instalment Payments) Regulations 1998 or, if later, the date on which the excess amount arises.

F16(3ZB)

In relation to a case falling within subsection F17(1)(cb) above—

(a)

if the payment for the accounting period concerned was made on or before the date which, if the company had been a large company, would have been the date on which the first instalment payment for that accounting period would have been treated as becoming due as mentioned in regulation 5(3) F18or 5A(3) of the Regulations referred to in subsection F19(3ZA) above, the material date is that date, or

(b)

if the payment for the accounting period concerned was made later than the date referred to in paragraph (a) above, the material date is the date on which that payment was made.”

Chapter 4 of Part 22 of CTA 2010 (surrender of tax refund within a group) applies with the modifications specified in paragraphs (2) to (5) in any case where a tax refund is due to be made to the surrendering company in respect of an amount paid in respect of its total liability for an accounting period and F2the surrendering company or the recipient company (or both) is a large company or a very large company

In section 963 (power to surrender tax refund), after subsection (2) insert—

“(2A)

If, and to the extent that, the tax refund surrendered is within subsection (4)(c) and is of an amount paid in respect of the surrendering company’s bank levy liability for the accounting period, the requirement in subsection (2)(b) is to be read as a requirement that the surrendering company and the recipient company are both entities which are jointly and severally liable for the surrendering company’s bank levy liability for that period in accordance with paragraph 53 of Schedule 19 to the Finance Act 2011.

(2B)

In subsection (2A) the reference to the surrendering company’s bank levy liability for the accounting period is to any liability within paragraph 53(8) of that Schedule which the company has for that accounting period.”.

In subsection (4) of that section—

In section 964 (effects of surrender of tax refund), in subsection (6), after “refund” insert “other than a refund of instalment corporation tax”.

After that subsection insert—

“(6A)

For the purpose of this Chapter “the relevant date”, in relation to a refund of instalment corporation tax, means—

(a)

in so far as the refund falls to be treated in accordance with subsections (6C) to (6E) as consisting of a repayment of the whole or any part of a payment made on or before the earliest due date, that date, and

(b)

in so far as the refund falls to be treated in accordance with those subsections as consisting of the repayment of the whole or any part of a payment made after the earliest due date, the date on which the payment was made.

(6B)

For the purposes of subsection (6A), the earliest due date, in relation to a refund of instalment corporation tax, is—

(a)

where the surrendering company is a large company F4or a very large company for the relevant accounting period, the earliest date on which any amount is treated as having become due and payable by that company under F5... the Corporation Tax (Instalment Payments) Regulations 1998 in respect of that company’s total liability for that period, and

(b)

where the surrendering company is not a large company F6or a very large company for that accounting period, the date that would have been the earliest due date under paragraph (a) had it been a large company or a very large company for that period.

(6C)

For the purposes of subsection (6A), at the same time as giving notice under section 963(2) in the case of any refund of instalment corporation tax relating to any accounting period, the surrendering company must also give notice to an officer of Revenue and Customs identifying the extent to which it requires the refund to be treated as consisting of amounts comprised in any payment or payments made for that period.

(6D)

Where, in a case to which subsection (6C) applies, an officer of Revenue and Customs notifies the surrendering company that the amount of the refund of instalment corporation tax relating to the accounting period is less than the aggregate of the amounts identified under that subsection, the company must, no later than 30 days after the notification, give a revised notice under that subsection to the officer of Revenue and Customs.

(6E)

Where in a case to which subsection (6D) applies—

(a)

a notification has been given to the surrendering company under that subsection, and

(b)

the surrendering company does not give a revised notice in accordance with the requirements of that subsection,

the same consequences follow as if a notice had not been given in accordance with section 963(2) in relation to the refund.

(6F)

In this section—

(a)

references to a refund of instalment corporation tax are references to any refund of tax for any accounting period which falls in relation to that accounting period within paragraph (c) of the definition of “tax refund” in section 963(4),

(b)

“large company” F7and “very large company” have the meanings given in the Corporation Tax (Instalment Payments) Regulations 1998, and

(c)

references to the total liability of a company for an accounting period are to be construed in accordance with regulation 2(3) of those Regulations.”.

This regulation applies where—

Where this regulation applies—

In paragraph (2)(d) the reference to an applicable accounting period being the same as the chargeable period shall be construed in accordance with paragraph 54 of Schedule 19.

F1HMRC may, at any time following the relevant date, by notice require any company to furnish them, within such time (not being less than thirty days) as may be provided by the notice—

In paragraph (1) “the relevant date” means the date specified in paragraph 14(1) of Schedule 18 as the filing date for the company tax return for the accounting period concerned.

This regulation applies if the relevant entity or the responsible member (“E”) makes an instalment payment which includes an amount in respect of the bank levy.

Subject to paragraph (4), E must provide written notice (a “quantification notice”) identifying the amount of the instalment payment which is in respect of the bank levy.

A quantification notice must be given to an officer of Revenue and Customs on or before the date on which payment is made.

Where E is a member of a group payment arrangement under section 59F of the Management Act (arrangements for paying tax on behalf of group members), but E is not the member which is responsible for discharging the liability of the group under that arrangement—

The requirement to provide a quantification notice under this regulation shall be treated as a requirement to comply with an information notice for the purposes of Part 7 of Schedule 36 to the Finance Act 2008 (information and inspection powers).

F1HMRC may, at any time following the relevant date, by notice require a company to produce, within such time (not being less than thirty days) as may be provided by the notice—

In complying with a notice under paragraph (1) copies of books, documents and other records may be produced instead of originals, but—

In paragraph (1) “the relevant date” has the same meaning as in regulation 10.

An officer F1of Revenue and Customs authorised to do so may, at any time following the relevant date, F2by notice require a company to make available for inspection, at such time as that officer may reasonably require, all such books, documents and other records in its possession or power as could be required to be produced by notice F3... under regulation 11.

Where records are maintained by computer the officer making the inspection shall be provided by the company with all the facilities necessary for obtaining information from them.

In paragraph (1) “the relevant date” has the same meaning as in regulation 10.

the company, or a person acting on its behalf, deliberately or recklessly fails to pay the amount in question in accordance with F1these Regulations;

the company, or a person acting on its behalf, fraudulently or negligently makes a claim for repayment of an amount under regulation 6(2).