QIPs: Corporation Tax payment deadlines for large and very large companies
09/04/24
Rapidly growing companies must consider the tax payment deadlines that large and very large companies in the UK are subject to. Rather than paying Corporation Tax 9 months and 1 day after the accounting period ends as smaller companies do, large and very large companies are subject to quarterly instalment payments (QIPs). At mgr, our corporate tax planning expertise means that we’re equipped to help companies plan for the timing of tax payments.
What defines a ‘large’ or ‘very large’ company?
If a company has annual profits exceeding £1.5 million but less than £20 million, then it is categorised as a large company for Corporation Tax payment purposes – these limits are proportionally reduced for companies with shorter accounting periods and are also reduced when a company has one or more associated companies. Broadly, a company is an associated company of another when one of the two has control of the other or both are under common control.
A company is not considered ‘large’ for a Corporation Tax accounting period (CTAP) if its taxable profits for that period don’t exceed £10m, and if it was not classed as large or very large for any accounting period falling or ending in the preceding 12 months. This allows a grace period for growing companies but is something to watch out for with rapid growth.
Meanwhile, companies with annual profits exceeding £20 million are categorised as very large companies. As with large companies, this threshold is proportionally reduced for companies with shorter accounting periods or with associated companies There is no one-year grace period for companies that become very large.
When are QIPs due?
Corporation Tax will be paid in four equal payments. Working on the basis of a 12-month period, a large company will be due to make their first payment six months and 13 days after the first day of the accounting period, and every three months following that date. For very large companies, the first payment will be due even sooner with the first payment due 2 months and 13 days after the first day of the accounting period.
HMRC charges interest and potential penalties can be raised on late or underpaid QIPs. For further guidance on when your company should pay its tax liabilities, please do not hesitate to get in touch with Esther Ollech at esther.ollech@mgr.co.uk.
