The practical issues arising from corporation tax refunds
By Chris Campbell, Head of Tax (Tax Practice and Owner Managed Business Taxes)
28 November 2023
Given the delays experienced with receiving corporation tax repayments, we share the results of our recent conversations with HMRC and introduce the new online portal for section 455 repayments.
As part of our ongoing dialogue with HMRC, we have raised that our members tell us about delays in receiving corporation tax repayments on behalf of their clients.
HMRC has told us that most corporation tax returns are currently submitted without bank account details. This results in HMRC spending time looking into the repayment claim before a cheque is sent out. This causes internal delays within HMRC, ahead of the postal delays and that does not take into account the time it takes for a cheque to be cashed.
Whilst most companies pay their corporation tax electronically, HMRC is telling us that companies will receive their repayments quicker if bank details are included in their corporation tax returns.
In most cases, receiving repayments quicker is desirable. However, if the repayment is incorrect and the interest clock has started before notification has been received, it is important that companies are not disadvantaged in terms of interest charged in respect of a repayment that is not due. This is something we have flagged to HMRC.
New online system for section 455 repayments
In addition to regular corporation tax repayments, our members also tell us about delays in receiving section 455 repayments. This would be due when a loan to a participator has been repaid or released and the company is entitled to a repayment of the section 455 tax repayment previously made.
The new form L2P is now available on the HMRC website. This enables close companies, or agents acting on their behalf, to claim repayment of the section 455 tax paid on the loan balance.
The new online form does not change the fact that relief cannot be claimed until nine months and one day after the end of the corporation tax accounting period in which the loan was repaid or released.
Tax agents working on behalf of clients can also claim. Agents will need to use their agent services account to access the service. Before completing the form, it will be necessary to have the company’s unique taxpayer reference (UTR) number and bank or building society details. HMRC will also need details of the accounting period the loan was made and the accounting period the loan was repaid to process the claim for repayment.
We have had some initial feedback from some members indicating problems accessing the new portal. Please let us know if you have any similar issues in order that we can share feedback with HMRC.
Let us know your views
We welcome your views, which help inform our work on consultations or other tax-related matters. ICAS responds to many tax calls for evidence and consultations, as well as producing tax policy papers and reports. We also regularly attend meetings with HMRC at which service levels, delays and other issues are discussed, and we raise problems being encountered by members.
Please email tax@icas.com to share your insights and feedback.
