A4: The UK Tax System and its Administration | The Time Limits for the Submission of Information, Claims and Payment of Tax, Including Payments on Account (ACCA TX)

Accounks - ACCA TX A4 - The Time Limits for the Submission of Information, Claims and Payment of Tax, Including Payments on Account

The Time Limits for the Submission of Information, Claims and Payment of Tax, Including Payments on Account recognises the time limits that apply to the filing of returns and the making of claims and the time limits that apply to the filing of returns and the making of claims; explains how large companies are required to account for corporation tax on a quarterly basis and compute the quarterly installment payments and lists the information and records that taxpayers need to retain for tax purposes.

The Time Limits for the Submission of Information, Claims and Payment of Tax, Including Payments on Account

a. Recognise the time limits that apply to the filing of returns and the making of claims.[2]

With respect to time limits, all submissions and amendments must be made within nine months of the date of filing. Amendments can be made by either the HMRC or the taxpayer.

b. Recognise the due dates for the payment of tax under the self-assessment system, and compute payments on account and balancing payments/repayments for individuals.[2]

Taxes are due by January 31st of the next year.

Payments on Account (POAs) should be made on or before the following dates:
1st Payment – 31st January of the current year
2nd Payment – 31st July of the current year
3rd and Final Payment – 31st January of the next year

 Quick Tip: Payments on Account are calculated based on last year’s “relevant amount.” with half payable on each POA. 

The relevant amount can be calculated as follows:
Relevant Amount = Tax Due – Amount Deducted at Source

For example, let’s assume that your full tax bill was $6,000, including $750 that was collected via PAYE. Your POAs can be calculated as follows:

1st Payment = (6,000-750)/2 = 2625
2nd Payment = 2625

 Quick Tip: Payments on account are due when the tax payable for the previous year is over GBP 1,000. 

c. Explain how large companies are required to account for corporation tax on a quarterly basis and compute the quarterly installment payments.

  1. Companies are allowed to make quarterly installments on the corporation tax owed:
  2. Quarterly instalments apply to large companies. A company is considered a “large company” if its profit exceeds £1.5 million on a single company; if there are no related 51% group companies and if accounts are prepared for a twelve month period. The profit limit must be divided by the number of 51% related group companies and time apportioned for a chargeable accounting period of less than 12 months.
  3. Installments are based on the estimated current year’s liability.
  4. The four quarterly instalments will be made in months 7, 10, 13 and 16 following the start of the accounting period and each installment is due on the 14th of the month.
  5. Quarterly payments are not required if the company was not large in previous year

d. List the information and records that taxpayers need to retain for tax purposes

Business records should be retained for 5 years from January 31st following the end of the tax year.

Personal records should be retained for 12 months from January 31st following the end of the tax year.

Excluded Topics

  • The payment of CGT by annual instalments
  • Simple assessments

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About Accounks
Accounks is an ACCA student blog that follows my journey to the ACCA qualification.

Author: Melissa

Just another ACCA student :)

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