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Section 419 Assessments

We received Notices of correction to Corporation Tax returns last week for two different clients, where HMRC have revised the Self assessment to show Section 419 tax where Directors Loan accounts are overdrawn.  Although Corporation Tax is not yet payable, HMRC are adjusting the tax calculation on the basis that relief is "not available on the basis of a proposed repayment at some time in the future".  I can't quite see where they are coming from...nor why they are still referring to Section 419 instead of Section 455...

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08th Oct 2012 16:12

Please clarify

Are you saying that the CT600A pages were completed to show both that loans were outstanding at the year-end and that they would be repaid within 9 months?  If so, was a future date entered for the repayment (but still within 9 months) or no date at all?

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08th Oct 2012 16:43

CT600A says

.....will be repaid by xx date.  XX being the due date for payment of the Corporation Tax

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08th Oct 2012 16:48

one day too late?

Just a thought - the due date for CT is 9 months + a day, whereas maybe the s.455 relief is only available for repayments made within 9 months?

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Refile

If, as a matter of fact, the loan hadn't been repaid when the CT600 was filed, then no relief was due under S.458 at that point and HMRC are correct.

Just refile the Returns (as amendments) with an actual date once the loans have been repaid.

No idea why HMRC are still calling it S.419 though.

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08th Oct 2012 17:07

Thank you

Helpful as always

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Or

If you know the loans are going to be repaid, dont file the Ct600s until you have a date for repayment.

Why file 2 returns when you can file one?

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I agree...

... but since the Returns in question have already been filed, they can't now be unfiled.

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Agreed George

That was more a tip for the future :)

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Tip 2 for the future

Don't have an overdrawn director's account at the year-end, then there's no need to complete the supplementary pages. Why make work for yourself?

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09th Oct 2012 14:47

Don't you have any clients Andy?

If only

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No

Chris Smail wrote:

Don't you have any clients Andy?  

If only

Is it that obvious?

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By Exector
09th Oct 2012 17:46

Terminology

Still called s.419 on the CT600A pages!

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