Me again !, this time it is not about Furlough, thanks god I hear you say, But bear with me it will be worth it especially if you are trading through a limited company and in the current difficult trading climate the company has incurred trading losses, this remedy will give you cashflow in a form of loss relief claim being made earlier than the normal claim timeline.
HMRC have recently announced that they may allow limited companies to make claims for loss relief and tax refunds even though the current accounting period has not yet ended and the corporation tax return has not been submitted. This will be available to companies of all sizes but they will be required to provide evidence to support the claims.
REFUNDS OF QUARTERLY INSTALMENT PAYMENTS
Companies with profits in excess of £1.5 million are required to make quarterly instalment payments (QIPs) of their corporation tax liability much earlier than the normal payment date which is 9 months after the end of the accounting period.
For year ended 30 June 2020 a company with profits between £1.5 million and £20 million would be required to pay 25% of the estimated liability on 14 January 2020, 50% on 14 April with further payments due on 14 July and 14 October 2020. Where profits exceed £20 million the payments are due 3 months earlier.
If the same company now anticipates that it will make a loss for year ended 30 June 2020 they may be able to have the tax paid in January and April repaid and the further QIPs reduced to nil. Furthermore, HMRC may allow the losses to be carried back and set against the previous accounting period ended 30 June 2019 resulting in a further tax repayment even though the 30 June 2020 corporation tax return has not yet been submitted.
Note that the £1.5 million and £20 million limits referred to above are divided by the number of companies under common control so for example the limit would be £500,000 per company if there are 3 companies in a group.
CARRY BACK TO PREVIOUS ACCOUNTING PERIOD
Where company profits are below the £1.5 million limit then quarterly instalment payments (QIPs) will not be due but you may still be able to make a claim to set a loss against profits of the previous accounting period and obtain a tax repayment where losses are anticipated.
We can of course help you make a claim and negotiate a tax repayment with HMRC, get in touch with your usual client manager www.shaikhandcoaccountants.com please note the website is full of useful resources , worth a visit.
Stay healthy and safe and remember we are here by your side with your back covered.
The information contained in this article is for general information purposes only and does not constitute advice, Whilst we endeavour to keep the information up-to-date and correct, we make no representations or warranties of any kind, express or implied, about the completeness, accuracy, reliability, suitability for a particular purpose. We recommend that professional advise should be taken from a suitably qualified expert before undertaking any action.