Quarterly Payments (QIPs) in Corporation Tax Advanced
In Corporation Tax Advanced, payments are displayed in schedule
A2 - Tax payments and interest
. Quarterly payments are calculated when a company is classified as large for 2 consecutive years.Set up the correct number of associates
To ensure accurate calculations, it is essential to set up the correct number of associates. The application defaults to 9,999 associates, which may incorrectly trigger quarterly payments or classify a company as very large, especially for periods starting on or after 1 April 2019.
The number of associates can be verified in the
A1 - Tax calculation
schedule, row 40. Cell D40 Associates Brought Forward
should reflect the correct number of associates. This cell is editable only in the 1st accounting period set up within Corporation Tax Advanced. Correcting this and updating each subsequent computation is crucial for accurate calculations.Determine payment installments
The O schedule contains questions that determine if payments are due in installments. Key cells include
E128 Large last period (ignoring earlier periods)?
and E131 Large this period (ignoring prior period)
, which, if both set to Yes
, will trigger quarterly payments. Cells E132 'Large for instalment calculations?'
or E144 'Very large for instalment calculations?'
will calculate as Yes
if the company is classified as large or very large, respectively. Check current and prior year returns if these settings are incorrect.From version 20.1 of Corporation Tax Advanced, if you need to force the application to calculate the payments based on a company being Large or Very Large, you can go to the O schedule and in cell
E116 'Use calculated status or override company size'
you can use the dropdown menu to change the selection from Calculated (the default option), to Large or Very Large.If you have previously entered payments in schedule
A2 - Tax payments and interest
, you will need to re- visit schedule A2 - Tax payments and interest
and remove the payments before changing the company size. This is because irrelevant rows are just hidden when the size is changed and if payments are left in, it can skew the results.For more information, review the following definitions for each size of company. Remember that any profit thresholds are reduced proportionately where there is a short accounting period or if there are associated companies. Tax liability limits are also reduced proportionately for short accounting periods.
Company size definitions
Understanding company size is crucial for determining payment schedules:
- Company is not large
- Companies with profits lower than £1.5 million or not large in the past 2 years pay tax in 1 installment, due 9 months and 1 day after the accounting period end date.
- Company is large
- Companies with augmented profits over £1.5 million (for periods starting before 01/04/2019) or between £1.5 million and £20 million (for periods starting on or after 01/04/2019) pay tax in quarterly installments, due 6, 9, 12, and 15 months and 13 days after the accounting period start date.
- Company is very large
- Introduced for periods starting on or after 01/04/2019, companies with augmented profits over £20 million pay tax in quarterly installments, due 2, 5, 8, and 11 months and 13 days after the accounting period start date. There is no grace period for the 1st year a company is considered very large.