Companies with profits in excess of £1.5 million are required to make quarterly instalment payments (QIPs) of their corporation tax liability much earlier than the normal payment date which is 9 months after the end of the accounting period.
For the year ended 30 June 2020 a company with profits between £1.5 million and £20 million would be required to pay 25% of the estimated liability on 14th of January 2020, 50% on 14th of April with further payments due on 14th of July and 14th of October 2020. Where profits exceed £20 million the payments are due three months earlier.
If the same company now anticipates that it will make a loss for year ended 30 June 2020, they may be able to have the tax paid in January and April repaid and the further QIPs reduced to nil. Furthermore, HMRC may allow the losses to be carried back and set against the previous accounting period ended 30 June 2019 resulting in a further tax repayment even though the 30 June 2020 corporation tax return has not yet been submitted.
Note that the £1.5 million and £20 million limits referred to above are divided by the number of companies under common control, for example the limit would be £500,000 per company if there are three companies in a group.
Where company profits are below the £1.5 million limit then QIPs will not be due. They may still be able to make a claim to set a loss against profits of the previous accounting period and obtain a tax repayment where losses are anticipated.
If you would need assistance to make a claim and negotiate a tax repayment with HMRC, please get in touch and we will be happy to help.