Quarterly instalment changes for very large companies

Mar 25, 2019

For accounting periods beginning on or after 1 April 2019, The Corporation Tax (Instalment Payments) (Amendment) Regulations 2017 implements changes to the due date of instalments for certain “very large” companies, as defined.  

The rules will require “very large” companies to make payments earlier. A “very large” company is one whose augmented profits (taxable total profits plus non-group dividends received) exceed £20 million. This threshold is adjusted for the number of related 51percent group companies at the end of the previous accounting period and if the company has an accounting period less than 12 months.

When a company is first classed as “very large”, no grace period is given, i.e. the earlier due dates will immediately apply to that accounting period.

Where the accounting period is 12 months, the first payment will be due two months and 13 days after the beginning of the accounting period. The second, third and fourth payments will be due three months after the previous payment, i.e. the second payment will be due three months after the first, the third three months after the second and so on. This will be the 14th day of months three, six, nine and 12 of a 12 month accounting period. This will mean that a company’s entire corporation tax liability will be paid before its accounting period end instead of two instalments falling due within the period and two after the period end, as it is currently.  

Where the accounting period is less than 12 months, the final instalment will remain due on the normal date, i.e. on the 14th day of the last month of the accounting period. Earlier instalments only fall due if their due date is prior to the date of the final instalment. The calculation of each instalment is unchanged.