Getting credit for s.455 repayment due

Getting credit for s.455 repayment due

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Company has year end of 28 Feb 2013.

CT600 and accounts recently submitted. Overdrawn DLA has fallen, resulting in credit due. This credit will reduce the corporation tax bill that would otherwise be payable on 1 December 2013.

My letter sent to HMRC in early November 2013: "Please ensure that this credit is offset on 1 December 2013 against the liability for the year ended 28 February 2013. Debt Management often spend their time chasing up apparently unpaid corporation tax when in fact it is simply that the s.455 credit has not been actioned."

Reply received today from HMRC to the effect to re-send my letter on 1 December as the claim can only be made then!

So result will be debt management will chase for non-debt, I will have to re-send my letter, all wasted work. HMRC could simply have parked my original letter and actioned it on 1 December 2013!

Does any one think that perhaps there is some inefficiency that could be reduced thus saving time and money for all concerned?!?!?!?

Replies (14)

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By Steve Kesby
27th Nov 2013 13:48

Hang on...

... there are two sides to every story.

You're filing the CT600 now and sending your letter in now for your convenience surely? You don't want it hanging round so that you don't forget it?

HMRC are correct that a claim under S. 458 isn't technically possible until 1 December.

What you could do if you were prepared to inconvenience yourself only slightly is prepare the CT600 now on the basis that it will be filed after 1 December. Make a diary not to make sure that you do actually file it between 2 December and 28 February 2014 and pay the net tax due amount on 1 December.

Than all the problems go away. But it's better for you for HMRC to make a diary note to action your letter on 1 December.

So surely that amounts to you bemoaning HMRC for not doing the job that you're being paid to do for you?

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Replying to David Heaton:
Red Leader
By Red Leader
27th Nov 2013 14:05

yes but

Steve,

Following your suggested course of action, don't we still end up with the debt management office chasing for a non-debt?

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By mhtax
27th Nov 2013 14:11

No

There is no debt until you file the CT600 and HMRC can action your claim immediately

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By Steve Kesby
27th Nov 2013 14:12

No

There isn't a debt until 1 December.

On 1 December they don't know what the liability is. So if a payment is made there's nothing to chase.

On 2 December (or whenever the CT600 is filed before 28 February) it will show the very liability that was actually paid on 1 December, because the S. 458 claim can be made in the CT600 (in part 2 of the CT600A).

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Replying to 0098087:
Euan's picture
By Euan MacLennan
27th Nov 2013 14:28

Are you sure, Steve?

Steve Kesby wrote:

... because the S. 458 claim can be made in the CT600 (in part 2 of the CT600A).

The claim in Part 2 of the CT600A is only for new advances in the year (entered in Part 1) which have been repaid within 9 months of the year-end.  Claims under s.458 arising from repayments of loans advanced in previous years cannot be made on the CT600A (or anywhere else on the CT Return) and can therefore only be made by letter.

[EDIT] Crossed with Steve's last post.

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By Andywho is fed up
27th Nov 2013 14:14

Reclaiming S455 tax

I'm afraid I agree with the OP.  It is the system that is at fault.   As at the company year end the overdrawn loan account had reduced, therefore it is known that the S455 liability will reduce.   This is incontrivertable.  Accordingly, it is known from the outset that the overall net liability from the company for that year will be less than the straightforward CT liability 

Unfortunately, HMRC in their wisdom decided that they would provide companies with no simple way to advise them of the reclaim (perhaps in the hope that companies would overlook the reclaim and just keeping paying the CT in full!).

l have always written to HMRC after receiving acknowledgement of the CT  liability to advise of the S455 offset and so far have always had replies to the effect that the Inspector concerned has made a note of the fact and will amend the statement after the 9 month date.   In my opinion, this gives time for the Inspector to have a quick look over the accounts (which nobody has probably looked at) before the 9 month date and so raise any queries should he/she wish to do so well before the CT has to be paid.

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By Steve Kesby
27th Nov 2013 14:21

Ah, now I see

Apologies Red Leader. I was thinking that you meant that you had a liability for the year-ended to 28 February 2013 which has reduced because of subsequent repayment. That could then be dealt with on the CT600.

If the S. 455 liability relates to the ye 28 or 29/2/12, then an amended CT600 Return would bring up a credit for that period.

Otherwise I accept that there is then a system fault.

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By Phil Rees
27th Nov 2013 14:30

And as for "bemoaning HMRC for not doing the job that you're being paid to do "...

I laughed because that is what they do to us. We are unpaid tax collectors and they punish us for getting it wrong. 

 

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Replying to patrickcb:
Red Leader
By Red Leader
27th Nov 2013 15:06

@Steve @Euan

To clarify the facts for you in my case - the credit arises because the overdrawn DLA at 28.2.13 is lower than at 28.2.12 and s455 tax had been paid for y/e 28.2.12. 

So are you saying that rather than send a letter to get the credit, I should amend the s455 calculation in the CT600 for y/e 28.2.12 and submit online an amended CT600 for that earlier year?

Thanks.

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Replying to Grundy:
Euan's picture
By Euan MacLennan
27th Nov 2013 15:20

No!

Red Leader wrote:

To clarify the facts for you in my case - the credit arises because the overdrawn DLA at 28.2.13 is lower than at 28.2.12 and s455 tax had been paid for y/e 28.2.12. 

So are you saying that rather than send a letter to get the credit, I should amend the s455 calculation in the CT600 for y/e 28.2.12 and submit online an amended CT600 for that earlier year?

Thanks.

You cannot enter anything different on the CT600A for the y/e 28.02.12 because the loan was not (partially) repaid within 9 months of 28.02.12, unless you now know that the reduction of the loan occurred in the first 9 months of the y/e 28.02.13, rather than in the last 3 months.  As we are now nearly at the date that the next CT is due, just write a letter to claim relief under s.458.

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By Steve Kesby
27th Nov 2013 15:30

Red Leader

To the extent that the reduction arose before 1 December 2012 you can file an amendment for the year to Feb 12, which would then bring up a credit automatically. Even if it doesn't result in an automatic set-off, you can at least refer the DMU to the credit.

If the reduction arose in the last 3 months of the 2012 year-end though, you do still have the problem.

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Replying to chewmac:
Red Leader
By Red Leader
27th Nov 2013 17:24

oh well

I've just sent a second letter to HMRC similar to the first but with the opening paragraph: "Don't read the rest of this letter until 1 December 2013".

Sometimes this job just gets to you!

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Replying to WhichTyler:
By JCresswellTax
27th Nov 2013 18:41

Quality! :)

Red Leader wrote:

I've just sent a second letter to HMRC similar to the first but with the opening paragraph: "Don't read the rest of this letter until 1 December 2013".

Sometimes this job just gets to you!

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Stepurhan
By stepurhan
27th Nov 2013 21:01

Missed a trick

You could have held on to the return until around new year's and marked the letter "Do not open until Christmas". Imagine how excited the little tykes at HMRC would have been.

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