COVID-19: ICAEW urges for clarity over QIPs repayments

27 May: ICAEW’s Tax Faculty urges HMRC to facilitate refunds of instalment payments of corporation tax that companies believe they have overpaid in respect of prior periods due to the impact of coronavirus.

In its latest Agent Update, HMRC flagged that companies may find that their forecast corporation tax liability may be less than previously expected due to the impact of the coronavirus pandemic. It advises that companies could make a reclaim if quarterly instalment payments (QIPs) paid to date were considered excessive.

The Tax Faculty is aware that some companies are finding that forecast losses in the current period are so great that they are clear QIPs paid in respect of the prior period were also excessive. In certain cases, companies are comfortable of this even before the current period has concluded.

Although there is some opinion from members that the current instalment payment regulations do not prohibit HMRC from making a repayment of QIPs in respect of the prior period, it is clear HMRC is not certain of this position.

The Faculty understands that HMRC is considering this point, but at present repayment of prior year QIPs (in the absence of a formal loss carry-back claim) are not being made until HMRC’s position is confirmed.

Given the extenuating circumstances, ICAEW has submitted representations urging HMRC to extend further support to businesses and facilitate a repayment of overpaid tax as soon as possible either by using its existing powers under the QIPs regulations or HMRC's wider powers for change, s76, Coronavirus Act 2020, which states: “Her Majesty’s Revenue and Customs are to have such functions as the Treasury may direct in relation to coronavirus or coronavirus disease.”

The Faculty will update members as soon as HMRC’s position is confirmed. For the sake of struggling industries facing unprecedented losses in revenue and substantial cash-flow pressures, the Tax Faculty hopes this can be resolved as swiftly as possible.