CT600 and Covid

Why should we file a return

Didn't find your answer?

I have just received a email from HMRC , part of the text states:

These boxes were added to the CT600 on 6‌‌ ‌April 2021. If your client received a CJRS grant, EOHO payment and their return was filed before 6‌‌ ‌April 2021, or after that date but without completing the relevant boxes, your client’s return will need to be amended.

My questions is what will happen if we don't alter the return and why should HMRC ask for forms to be correct that at the time of filing where correct.

Surely HMRC are the ones in the wrong and they should correct their own errors.

Replies (36)

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RLI
By lionofludesch
24th Nov 2021 22:20

Depends what the penalties are for failing to do so.

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Replying to lionofludesch:
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By GHarr497688
24th Nov 2021 22:35

point taken however a form was filed in time and so in theory it contained an error. As HMRC form was correctly completed and then the form altered by HMRC later how could a penalty be charged.

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Replying to GHarr497688:
RLI
By lionofludesch
24th Nov 2021 22:50

GHarr497688 wrote:

point taken however a form was filed in time and so in theory it contained an error. As HMRC form was correctly completed and then the form altered by HMRC later how could a penalty be charged.

You haven't provided the required information. You've filled in the wrong form. You should've waited until the correct form was available.

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Replying to lionofludesch:
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By GHarr497688
25th Nov 2021 13:20

Our Form was correct as the form after 5th April 2021 wasn't even in existence.
31st August 2020 year end was filed before the Form was altered by HMRC. If the correct form was in use at the time of filing and in accordance with the Law and all details and taxes paid correctly why should a taxpayer be expected to know that a form was changed by HMRC at a later date without even being told the form had changed ?

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Replying to GHarr497688:
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By Wanderer
25th Nov 2021 13:30

I'm with you.

I won't be amending any in those circumstances.

HMRC are getting more & more bizarre. This, badly worded email that suggests revised forms MUST be submitted, but then ambiguity in the wording. Couple that with the ones on CJRS a couple of weeks ago issued after the scheme ended! I won't be reviewing any of my CT600s nor CJRS claims in the light of these two missives.

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Replying to Wanderer:
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By Paul Crowley
25th Nov 2021 13:40

+1
The form was correct on filing
I am not making any ammendments for stupid HMRC mind games
The tax payable is correct
The extra box is just a statistics game
Not relevant on partnerships or sole traders

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Giraffe
By Luke
25th Nov 2021 11:29

The same email also states -
"If all coronavirus support overpayments were already repaid or have already been assessed before the tax return was filed – and there’s no coronavirus support schemes overpayment remaining due for payment – there’s no need to amend the return."

Does this mean that if there is no amount overclaimed then there is no amended return required?

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Replying to Luke:
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By GHarr497688
25th Nov 2021 13:23

Good point I am not sure. All I know is that the forms where filed in good faith , the Grants were taxed correctly and then for some reason HMRC changed the Form after date but didn't tell anyone. Its beyond belief - no one expects HMRC to change forms after the date they are due and then expects you to know they are changed.

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Replying to Luke:
By Ruddles
25th Nov 2021 13:49

I have spoken to HMRC -at a senior level - on this and made the point that no amended return should be required, on two grounds:

Inserting words that don't exist, I argued that the statement should read "... and there's no coronavirus support schemes overpayment remaining due for payment[, or no such overpayments arose in the first place] ..."

Secondly, I would argue that the overpayment of £0 had already been repaid by the time the return was filed.

HMRC agreed that there was no requirement to amend a return if no overpayment had ever existed.

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Replying to Ruddles:
Giraffe
By Luke
25th Nov 2021 14:46

Ruddles wrote:

I have spoken to HMRC -at a senior level - on this and made the point that no amended return should be required, on two grounds:

Inserting words that don't exist, I argued that the statement should read "... and there's no coronavirus support schemes overpayment remaining due for payment[, or no such overpayments arose in the first place] ..."

Secondly, I would argue that the overpayment of £0 had already been repaid by the time the return was filed.

HMRC agreed that there was no requirement to amend a return if no overpayment had ever existed.

Good! That makes sense. It seems pointless to go back, amend and re-submit forms where there was no overpayment and there is no change to tax due.

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By richard thomas
25th Nov 2021 15:34

You raise two questions.

The answer to the second is – who knows what’s in the collective mind of HMRC?

As to the first, it might be helpful to set out the legal position and to judge what HMRC are asking in the light of that.

I am assuming that in the case of the clients involved a notice to file (or “to deliver” as HMRC correctly call it) was issued for the period covering receipt of the grant. The client then filed a return electronically before 1 April 2021 (The email is wrong – the CT600 was updated on 1 April 2021 according to the webpage, not 6 April), which must have been before the relevant filing date as accounts for an accounting period ending before 1 April 2020 would not have CJRS or EOTHO payments.

Assuming the notice to file did not say otherwise, the requirement to file electronically is clearly met by completing the form available to be completed on the filing date, which in this case was the CT600 (2020). (I assume, and hope, Lion is joking in his post of 22:50 last night).

HMRC would now like the client to provide the information that now appears in boxes 471 to 474, 526 and 647 of the CT600. [See NOTE below.] Of course nothing at all stops HMRC asking a question, but whether they can enforce the request depends on their powers. The obvious way of obtaining the information is by opening an enquiry into the return under paragraph 24 Schedule 18 FA 1998 and making an information request under Schedule 36 FA 2008. Note that without a notice of enquiry a Schedule 36 notice cannot be issued just for the purpose of finding out what would have gone in the missing boxes unless HMRC have suspicions that the grants have not been included in the trading profit or that the trading profit included grants to which the company was not entitled (paragraph 21 Schedule 36).

But this is not what they say will happen. Instead they “need” the company to “amend” the return. As we have seen in the context of the SEISS letter discussed extensively recently, “need” is an all purpose nudge-type word they use instead of “we would like, but cannot insist on”. They cannot force anyone to amend their return – paragraph 15 Schedule 18 says “[a] company may amend”.

Paragraph 16 allows HMRC to amend a return by correcting obvious errors or omissions, but here there are none (or they would threaten the use of the power which they are happy to use in other circumstances). In any case an HMRC correction can be nullified by objecting to it.

The caveat to all this involves a situation where the company knows that it was not entitled to any part of the grants and has not voluntarily repaid the amount. Under paragraph 12 Schedule 16 FA 2020 where a person is chargeable to income tax under paragraph 8 on grants to which they were not entitled and which have not been repaid, they must notify their chargeability to HMRC within 90 days of discovering their lack of entitlement or become liable to a penalty under Sch 41 FA 2008. This is so irrespective of whether they have been given a notice to file.

One such place where the notification might be made is in the CT return, but in the absence of a box such as 474 it could I suppose be done in the white space.

But this of course will not be relevant unless there is an unremedied failure by the client.

[NOTE] At this point at about 1100 I stopped compiling this note for a period, thus I did not see any of the posts starting with Luke’s of 11:29 which casts a somewhat different complexion on things. What I’d be interested to know is whether Luke’s quotation comes before and after the OP’s.

Still either way, the email is extremely badly worded. And still wrong, as even if there is an overpayment yet to be repaid, so that there is a tax charge, you do not “need” (ie legally have) to amend a return (one that didn’t ask the appropriate question and has no box for it) for HMRC to be able to tax the amount and charge failure to notify penalties. You just need to tell them the figure.

I’m with Wanderer and Paul C on this one.

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Replying to richard thomas:
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By Wanderer
25th Nov 2021 15:46

As I've said before I always enjoyed reading your judgements (one case permanently in my in tray).
Same with your posts on AWeb. It's great that you contribute, thank you.

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Replying to Wanderer:
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By richard thomas
25th Nov 2021 16:27

Which one is that?

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Replying to richard thomas:
Giraffe
By Luke
25th Nov 2021 17:50

richard thomas wrote:

Which one is that?

The paragraph I quoted comes directly after that quoted by the OP.

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Replying to richard thomas:
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By Wanderer
29th Nov 2021 09:24

richard thomas wrote:

Which one is that?

Khan Properties Ltd.
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Replying to Wanderer:
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By Catherine Newman
26th Nov 2021 12:33

I agree on both scores. I like the 30 day CGT case comments.

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By richard thomas
26th Nov 2021 12:44

McGreevy?

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Replying to richard thomas:
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By Catherine Newman
26th Nov 2021 14:06

Yes. Just remembered it was a Non-Resident CGT case. Your comments were hilarious.

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Replying to richard thomas:
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By GHarr497688
25th Nov 2021 16:17

HMRC might do better to explain why the amendment is required. If all tax is paid correctly and they have the Accounts showing the Grants whats the point in it ?

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By I'msorryIhaven'taclue
25th Nov 2021 22:25

Luke's extract (from HMRC's help and support email highlights the crux of the matter. That email issues instructions that old-style CT600s filed 6th April 2021 (and who knows whether they meant to say 1st April, rather than 6th) or later need amending (with a new-style CT600) unless:

"If all coronavirus support overpayments were already repaid or have already been assessed before the tax return was filed – and there’s no coronavirus support schemes overpayment remaining due for payment – there’s no need to amend the return."

So to dispense with the second condition bolded "and", let's suppose there's no coronavirus support scheme overpayment (and thereby no overpayment remaining due for payment) then let's consider the first condition (which is an either/or):

"If aall coronavirus support overpayments were already repaid OR b have already been assessed before the tax return was filed..."

Other contributors have already expanded on a and reasoned quite credibly that if there was a nil overpayment then all overpayments must necessarily have been repaid. But what if the author's intention was to describe a scenario in which some [amount of support repayments] "were already repaid... before the tax return was filed"? For me, a is so ambiguous it could be read and interpreted as meaning so many variant situations.

That being the case, let us instead default to the b condition of or:

"...OR have already been assessed before the tax return was filed"

Assessed by whom? For "assessed", does the writer mean assessed by a director or his accountant, and thereafter "returned"? Note the difference between "were already repaid" and "have already been assessed" ["before the tax return was filed"]. The former might conceivably necessitate some amount of repayment prior to filing the Ct600; the latter might simply require some sort of "assessment" to have been made. Lord knows who exactly that assessor might have been, or what sort of reconciliation it might have involved - do they mean by us, I wonder?

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Replying to I'msorryIhaven'taclue:
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By GHarr497688
25th Nov 2021 22:33

I think my question is answered as : no overpayments are due back and the Grants have been assessed as Taxable and so no extra tax liability is due - as such the Form filled in was correct - the tax payable is correct - the form was valid at the time - completed correctly at the time and so no amendment is necessary. If an overpayment needed to be made or extra tax was due then a corrected form would be required . Thanks all .

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Replying to GHarr497688:
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By I'msorryIhaven'taclue
26th Nov 2021 09:29

Ahha, assessed as taxable.

So "assessed" in that context you're reading to mean the figures have been checked and "returned" (by us, the agents, on a CT600 [albeit an old-style CT600]) and processed by the Revenue. As opposed to an "assessment" as in some additional charge arising from a HMRC enquiry or similar.

LATE EDIT: Having since read RichardT's post, below, it seems the email does mean "assessed" by HMRC after all. viz: "have already been assessed by HMRC, whether the assessment is paid or unpaid"

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By richard thomas
26th Nov 2021 07:16

It is comforting to know that a senior level person in HMRC (Ruddles’ post of 25/11 13:49) agrees that the (“Help & Support” – really?) email text quoted by Luke at 11:29 has to be understood in the way Ruddles suggested.

What the senior level interpretation establishes is that HMRC are (apparently) only interested in the case where the figure that goes into box 526 on the new CT600 is greater than nil, because that will result in an assessment.

The problem is that that is not what it says and so officers at a junior level dealing with the response, or lack of it, to the email may not be informed of this senior level interpretation.

Construed literally, which is the only way a junior level officer is equipped to do, the text which excepts someone from complying with the previous paragraph only applies to cases where there has actually been an overpayment.

The actual text that is available at junior level and to the recipients of the email is also odd in this way. Suppose a person had before delivering the return disclosed an overclaim in CJRS of £20,000 out of receipts of £150,000 and had agreed to repay it but had not yet done so. That case is outside the text because the overpayment has neither been repaid or assessed and so fails the first condition and fails the second condition that there is no overpayment remaining due for payment. What then are the entries in the Covid boxes?

471 £150,000

472 £130,000

473 £20,000

526 £0

Why is this? Because 473 ask for overpayments already assessed or voluntarily disclosed. The CT600 guide on this box says:

“473 CJRS and JSS overpayment already assessed or voluntary disclosed
Use this box to record CJRS payments received in this accounting period, which at the time of completing this return:
• have already been assessed by HMRC, whether the assessment is paid or unpaid, or
• which have been voluntarily disclosed to HMRC as CJRS overpayments, WHETHER PAID OR UNPAID [My emphasis – and I would say “repaid or not”]”
This is shown in the example given.
The apparent reason for this is that the £10,000 is already on HMRC’s radar as a notification under paragraph 12 Schedule 16 FA 2020 and will, as the CT600 Guide says, be assessed separately if it is not paid.
Thus even with the senior level construction applied this is a case where HMRC apparently “need” the boxes even though 526 is £0 – and the use of the plural means they want all the boxes completed not just 526.
In my view, pace ISIAC, the reference to “assessed” is unambiguously to an assessment under paragraph 8 Schedule 16. The text of Box 473 and the CT600 Guide on the box makes this clear.
Finally I would comment on the OPs summary of 22:33 last night. It’s quite right to say that if Box 526 is nil, no amendment is necessary, and that is the view of the senior level person Ruddles spoke to. But if an admitted (to HMRC) overpayment is to any extent unrepaid it does not need an amendment of the return to bring it to HMRC’s attention, and if it is not yet disclosed it is simply notified under paragraph 12 Schedule 16 and does not need an amended return to enable HMRC to assess it.
What in my view the email should have asked was that any people who filed a return before 1 April should ensure that if there is an overpayment that has not either been disclosed to HMRC or assessed by them, it should be disclosed now or they may face increased penalties.

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Replying to richard thomas:
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By I'msorryIhaven'taclue
26th Nov 2021 10:13

richard thomas wrote:

What in my view the email should have asked was that any people who filed a return before 1 April should ensure that if there is an overpayment that has not either been disclosed to HMRC or assessed by them, it should be disclosed now or they may face increased penalties.

Excellent post - thank you! One small point: HMRC's email appears to extend not only to those grant and payment recipients who filed a return before 1st April (or, if you believe the date in their email, 6th April), but also to those [grant and payment recipients] who filed 1st (or 6th) April

onward using either an old-style CT600 or a new-style CT600 but without having completed the newly introduced grant-related boxes.

I've bolded the relevant text, below.

EXTRACT FROM HMRC EMAIL:

If your client received a CJRS grant and/or an EOHO payment, this will also need to be reported separately in the specific boxes provided on the CT600.

Boxes 471, 472 and 647 will need to be completed with the relevant amounts for the accounting period covered by the return, and boxes 473, 474 and 526 will need to be completed if there were any CJRS or EOHO overpayments.

These boxes were added to the CT600 on 6‌‌ ‌April 2021. If your client received a CJRS grant, EOHO payment and their return was filed before 6‌‌ ‌April 2021, or after that date but without completing the relevant boxes, your client’s return will need to be amended.

If all coronavirus support overpayments were already repaid or have already been assessed before the tax return was filed – and there’s no coronavirus support schemes overpayment remaining due for payment – there’s no need to amend the return. More information on this is available in the Company Tax Return guide.

END OF EXTRACT

So, per the bolded text of para #3, the net widens to include all grant and payment recipients who haven't completed the relevant boxes, regardless of whether they used an old or new style CT600 and regardless of when they filed. Which makes 1st April, or for that matter 6th April, something of a red herring.

However, if everything so far - down to the end of para #3 - is regarded as the general rule, then para #4 provides exceptions to the general rule. Which brings us back to the following exceptions (which, if you accept what I've written in the preceding para above, must apply to ALL such returns regardless of when they were filed):

EXTRACT
If all coronavirus support overpayments were already repaid or have already been assessed before the tax return was filed..
END EXTRACT

Since you've clarified the "assessed" exception relates to assessment by HMRC, that'll just leave the "all overpayments already repaid" exception.

All of which should apply to all grant and payment recipients, regardless of when their returns were filed; and regardless of whether they used old or new style returns.

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Replying to I'msorryIhaven'taclue:
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By richard thomas
26th Nov 2021 14:19

The position of filers who used the new CT600, ie those who filed on or after 1 April, is somewhat different from the position of those who used the old version. The “new version” filers covered by HMRC’s email are those who must have ignored the CV boxes, and so whose return is incomplete. They might think it appropriate to be nudged into amending even if the result is a box 526 entry of nil, though I cannot see what effective action HMRC might take in that case if they do nothing. There cannot be Schedule 24 FA 2007 inaccuracy penalties because there is no tax loss. But see my comments on paragraph 3 of the cited extract.

Where the box 526 entry would be positive, then the company would be well-advised to amend the return including the self-assessment in box 528, but cannot be forced to. If they don’t amend they should though notify liability under paragraph 8 Schedule 16 FA 2020 to stop the 12 month Schedule 41 clock running if it hasn’t already run out. Either way they may face Schedule 24 FA 2007 inaccuracy penalties which cannot be avoided simply by amending the return.

Like the SEISS email, this one would have benefited from separating out the position of new filers who have omissions from “old version” filers who have done nothing wrong.

As to your comments on paragraph 3 of the extract, I agree that the exception seems to apply to all filers. So those new filers where box 526 would be nil are not even being nudged to amend, which is sensible. Any filer, old or new, who has a box 526 positive amount is not within the exception as it must follow that not all overpayments would have been repaid (or disclosed but not yet repaid) or assessed. I’m afraid I do not follow what your point is in your last sentence.

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By I'msorryIhaven'taclue
26th Nov 2021 16:47

Thank you, Richard, for elaborating.

I'm too am scratching my head at my final sentence. What I was driving at was to include withing the rule / exception those recipients with a nil box 526 who filed 1st (or 6th) April onwards using the old return. (I know, I know... it was poorly worded and ambiguous. Who knows, maybe there's an opening for me in HMRC's tech writing dept!)

There'll surely be some in late April who opted for the old style CT600 rather than await their tax software provider's stable release of the new CT600s.

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By I'msorryIhaven'taclue
26th Nov 2021 16:48

Duplicated

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By fozia
29th Nov 2021 12:07

I am now pulling out my hair, being none the wiser after receiving the HMRC email you refer to.
I read it simply as "if you have received CJRS and/or EOTHO" then they want it shown in the 3 boxes. If you have also had any overpayments, then complete the additional 3 boxes. AND that it is treated as other taxable income.
It is an administrative nuisance as they clearly have this information from the furlough and EOTHO claims, just like they have the SEISS grant amounts.
Does that mean (going on the senior HMRC officials' view) that we only need to complete those 6 boxes if there was an OVERCLAIM only?

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Replying to fozia:
Giraffe
By Luke
29th Nov 2021 13:15

That is my current pragmatic viewpoint, not sure if actually correct but if there is no overpayment and it has been treated as taxable income then there is no tax loss...

I have got an email this morning about a Talking Points webinar on "Declaring your grants on your Company Tax Return" which I have signed up for and will ask the question.

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Replying to Luke:
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By fozia
29th Nov 2021 13:41

Thanks Luke. I have signed up to that webinar too and am sure we will be all asking the same question! Hopefully they give a clear answer.

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By I'msorryIhaven'taclue
29th Nov 2021 13:32

fozia wrote:

Does that mean (going on the senior HMRC officials' view) that we only need to complete those 6 boxes if there was an OVERCLAIM only?

That's seems to be the consensus if the old-style CT600 was filed prior to 1st April 2021 (or possibly prior to 6th April 2021, depending upon which HMRC source you choose to believe).

But, like the Revenue's copywriter, you've used the word "need": It might well be the case that you only need to (ie must) complete those 6 boxes if there was an overclaim; although whether you think it wise to complete them [by submitting an amended new style CT600] in any case is I suppose another matter.

Would others care to air their interpretations of whether an amended new-style CT600 needs to be returned in the following circumstances? (Or indeed whether it would be wise to do so).

(i) old-style CT600 filed March 2021, covid support payments received but no overclaim;
(ii) old-style CT600 filed May 2021, covid support payments received but no overclaim;
(iii) old-style CT600 filed May 2021, no covid support payments received;
(iv) new-style CT600 filed May 2021, covid support payments received but no overclaim, newly added boxes left unpopulated.
(v) new-style CT600 filed May 2021, no covid support payments received, newly added boxes left unpopulated (ie no zeros entered).

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Replying to fozia:
Giraffe
By Luke
29th Nov 2021 14:42

And of course the Agent update states

"If you or your client submitted a CT600 return without boxes 471-474 and 526, or left the boxes incomplete, and they have a CJRS or EOTHO overpayment to report they should resubmit the return.      

If all coronavirus support overpayments are already repaid or have already been assessed before the tax return is filed – and there’s no coronavirus support schemes overpayment due – they do not have to correct the return. "

I take that last sentence as being a fairly clear indication that there is no need to resubmit if there is no extra tax to pay.

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By fozia
03rd Dec 2021 14:26

*** Update following on from HMRC's webinar ***
"You don't need to amend your return, provided you've declared your coronavirus support grants or payment as taxable income AND you’ve either already repaid all Coronavirus support overpayments or you've already been assessed before filing your tax return, and there’s no overpayment due".

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Replying to fozia:
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By I'msorryIhaven'taclue
13th Dec 2021 13:27

Do you read that as applying to old-style CT600s that were filed post 6th April 2021?

We have a small number of such returns, all filed May / June 2021 but using the "old" *pre-6th April 2021 CT600s which were without covid-related fields, where covid support payments were received but there were no overclaims (therefore £nil overpayments).

*The Revenue might have published the new-style CT600 on 6th April, but our tax software supplier wasn't so quick.

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Replying to I'msorryIhaven'taclue:
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By fozia
13th Dec 2021 14:13

Hi the above statement is in relation to having to amend returns. A question was asked about returns filed after 5/4/2021 - see below:

Audience Question:
Q: Hello, I am tax agent. I have reported all CJRS payments received as companies income and calculated corporation tax due on them. However I have not included them in the boxes 471 and 472 . Do I need to send amendments if it does not change tax due ? I mean corporation tax returns field after 06/04/2021
A: You don’t have to correct your return if you’ve either already repaid all Coronavirus support overpayments or you've already been assessed before filing your tax return, and there’s no overpayment due.

So I would not think you need to amend any CT600s already filed (so long as no overpayments were due). However, all future returns should include the CJRS + EOTHO figures RECEIVED in the accounting period (not accruals basis). It would be great if HMRC could give us this figure like they do for SEISS grants claimed through the Digital tax account, or our tax software populated these figures in the CT600 based on the accounts prepared, as it is clearly identified separately on the TB.

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Replying to fozia:
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By I'msorryIhaven'taclue
13th Dec 2021 14:34

Thanks Fozia, much appreciated.

It's still all in HMRC's wordplay: "..already repaid all Coronavirus support overpayments" could mean that an amount in (full) repayment has already been made; or that all overpayments have been made because there aren't any such overpayments. Two quite different situations. I'm going to follow your lead and interpret it as meaning the latter scenario.

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