Can we claim an early repayment of corporation tax?

HMRC has clarified when companies can make claims for repayments of corporation tax based on anticipated losses.

The coronavirus pandemic has particularly affected the hospitality, tourism and aviation sectors, with companies in those sectors incurring substantial losses in their current accounting periods.

As a result, HMRC says it will consider claims for repayments of corporation tax for prior periods, based on anticipated losses before the current accounting period has ended.

Companies will have to provide HMRC with evidence to support such claims and be able to show that the losses are so substantial that they will comfortably cover both the income of the current period and the taxable profits of the prior period relevant to the claim.

Similar guidance in respect of repayments of corporation tax made on the normal due date for payment has also been published.

Examples of the kinds of information that could be provided as evidence for a claim can include:

• Updated profit and loss forecasts.
• Management accounts and draft tax computations.
• Assumptions behind the figures provided.
• Any relevant reports by the directors and/or public statements.
• Any information that has been shared with regulatory or financial institutions
• Clarification that no exceptional income/gains are anticipated in the current accounting period.
• Any external supporting evidence, such as sector or industry commentary.

All claims for anticipated losses will be examined critically by HMRC, and they will therefore need to be properly presented and thought through.

If your company has been adversely affected by Covid-19, it may be in a position to claim a repayment of corporation tax, so in the first instance you should discuss this with your usual Bishop Fleming advisor.

For more help with managing the effects of the coronavirus, check out our Business after COVID-19: Transition Knowledge Hub.