959AS Date for payment of corporation tax: companies with relevant accounting periods

Summary

This section sets out the due dates for the payment of corporation tax by larger companies with “relevant accounting periods”. Preliminary tax is payable by these companies in two instalments. The first instalment is payable within 6 months of the start of the accounting period but no later than day 21 (or day 23 for electronic filers) of the month involved. The second instalment is due 31 days before the end of the accounting period (i.e. normally in month 11 of the accounting period) – but no later than day 21 (or day 23 for electronic filers) of the month involved.

Details

Large companies, other than those with short accounting periods, pay their preliminary tax in two instalments.

• The first instalment is due within 6 months from the start of the accounting period but not later than the 21^st day of the month / 23^rd day for ROS.
• The second instalment is due 31 days before the accounting period end, or 21^st of the month if it would otherwise be later. If using ROS the relevant date is the 23^rd of the month (e.g. the same day as the single preliminary tax payment date for small companies).

The balance of tax payable is due by the specified return date.

Any tax due and payable under an assessment on the company will be due and payable before the specified return date also.

Subject to section 959AT (which deals with the tax payment date of groups) the balance of tax shall be deemed to have been due on the due date for preliminary tax where:

• the chargeable person has defaulted in the payment of either payment of preliminary tax
• The initial payment was less than:
  • 45% of current year tax liability, or
  • 50% of prior year tax liability
• in the case of a large company’s first accounting period within the charge to corporation tax, the adequacy of the initial payment can only be assessed by reference to the 45% of current year liability test.
• the amount paid in both initial and second instalment of preliminary tax is less than 90% of current year tax payable.
• preliminary tax was not paid by the due dates.

The amounts of preliminary tax which a company must pay in two instalments under this section are:

• an initial instalment: 45% of current year tax payable in the initial payment
• a final instalment: balance to bring the total paid up to the current year tax payable.

When looking at whether or not a company met the 45% of current year test for the initial payment, and

• they would have met the test but for a chargeable gain or gains / losses on financial assets in the period after the payment of preliminary tax, and
• the tax paid in the final instalment brings the total tax paid to 90% of the current year tax payable,

then the company will have met their preliminary tax obligations in respect of the initial instalment under this section.

When looking at whether or not a company met the 90% of current year test for the final payment and

• they would have met the test but for a chargeable gain or gains / losses on financial assets in the period after the payment of preliminary tax, and
• they make a top-up payment of preliminary tax within one month of the end of the accounting period bringing the total preliminary tax paid to 90% of the current year liability,

then the company will have met their preliminary tax obligations under this section.

Relevant Date: Finance Act 2019