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How to delay payment of Corporation Tax if current year is potentially making huge losses

How to delay payment of Corporation Tax if...

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I have never dealt with a client with losses before so this is a first.

One of my clients always make impressive profit year on year.  However, due to adverse changes in recent trading environment and regulations, my client is going to report huge losses in the current financial year.  Obviously there is no cashflow in the business to pay for the corporation tax of the previous financial year which is due very soon.  To carry back the losses to the previous year is not going to happen until the current year is completed and the CT600 filed.  Therefore, is there any procedures that my client can delay payment of corporation tax of the previous year due to the current year has a potentially large corporation tax loss?  If not, would HMRC eventually apply for insolvency on non payment of corporation tax?

Your views and suggestions would be highly appreciated before we get in touch with HMRC.


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By bernard michael
02nd Jan 2013 14:55

How big a gap will it be? If not too long it's worth asking the time to pay dept for the leeway you need on 0845 302 1435  

Thanks (1)
Replying to Democratus:
By eddconsulting
02nd Jan 2013 18:44

Hi Bernard,

Many thanks for the response.

It is about £200K, and the time gap would be at least 6 months before the current year's accounts can be prepared.  It does sound like that my client has to pay the tax first and claim it back later with no rules or provisions to delay payment.  But he has no cashflow to do so.  So????


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By bernard michael
03rd Jan 2013 09:22

Do follow up my Time to Pay suggestion. I've always found the dept to be reasonable and understanding once they understand that you're not taking the p**s.

What about shortening the accounting period. This would give you an immediately available tax loss with possibly a lower CT payment for the subsequent year 

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By Martin B
03rd Jan 2013 12:48

Carry back loss now.

Carry back a loss ( do a very very good estimate) from the current to the previous accounting period. ie in the ct600 you are to do for the pervious year plus tax computation. Then in due course amend Ct600 as appropriate. I have done this once  in the past ( when paper returns were allowed and no ixbrl was applicable) and it worked. It is within the rules because you are allowed to carry back.   

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By bonnere
03rd Jan 2013 13:13

Done it

We requested Time to Pay last year for the same reasons.


We made monthly contributions from January (to show we were willing), we spoke to them in April regarding a Time to Pay (it had to be April as we had a group arrangement). We had to send them some financials, including what we thought would be due after carrying back losses. They agreed to our suggested figure quite quickly.


We now have to submit this years returns and will owe interest on anything else we owe.


Phone them.

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By mbuffery
03rd Jan 2013 16:51

contact the corporation tax office

I had this issue with one of my clients recently.  Contact the corporation tax office, explain the position and request that the deadline for payment of the corporation tax be extended until such time as you are able to file the CT 600 for the current year.  They will expect an explanation of why losses have been incurred, and copies of management accounts, but provided that it is clear that the losses will cover the corporaiton tax liability, are likely to be helpful. 

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