What is a determination?

By Tolley in association with Philip Rutherford

The following Corporation Tax guidance note by Tolley in association with Philip Rutherford provides comprehensive and up to date tax information covering:

  • What is a determination?
  • When is a determination used?
  • Quantum of the determination
  • Time limits for HMRC to make a determination
  • Effect of a determination
  • How can a determination be displaced?
  • Special relief
  • Enquiries after displacement of determination
  • Discovery
  • Excessive repayments of tax

Determinations are issued by HMRC where a taxpayer fails to file a tax return. For example, a determination can be raised against a company for failure to file a CT600 corporation tax self-assessment return (or an individual for failure to file a SA100 self-assessment return).

The determination is based on an HMRC estimate of the amount of tax due. In compiling this estimate HMRC will take into account the information that is available to it. For example, HMRC may consider comparable businesses or corporate information.

Once HMRC has raised a determination this is treated as though the company had filed a tax return, ie this is the amount of corporation tax the company is liable to pay to HMRC. Issuing a determination also gives HMRC the opportunity to commence formal proceedings for the recovery of the late paid tax.

There is no appeal procedure relating to determinations. Once they are raised the company either needs to accept the determination, and pay the tax shown on the determination, or file a corporation tax return. A determination can only be superseded by an actual self-assessment return within the required time limits which are discussed below.

It is not good practice to fail to file a tax return but it should also be noted that in practice HMRC may often over-estimate the amount of tax owed. While the determination is based on HMRC’s best estimate, HMRC is unlikely to be aware of all of the reliefs available to the company in question. Companies should also seek to bring their filings up to date to ensure that all available claims and elections are made.

The key legislation for CTSA is found at FA 1998, Sch 18, para 36.

When is a determination used?

HMRC has the power to issue tax determinations in the absence of a corporation tax self-assessment return being submitted