QIPs ― when do they apply?

Produced by Tolley
QIPs ― when do they apply?

The following Corporation Tax guidance note Produced by Tolley provides comprehensive and up to date tax information covering:

  • QIPs ― when do they apply?
  • Definition of a large company
  • Related 51% group companies
  • Notification upon first becoming large
  • Very large companies
  • Bank levy
  • Group arrangements
  • Circumstances where QIPs are not payable

This guidance note provides details of quarterly instalment payments (QIPs) for corporation tax purposes and which companies need to pay their tax liabilities in this manner.

Generally, corporation tax is payable nine months and one day after the end of the relevant accounting period. However, large companies are required to pay their corporation tax liability upfront in four quarterly instalments (subject to a few exceptions which are set out below).

The rules in relation to the payment of quarterly instalments and the definition of a large company can be found in Corporation Tax (Instalment Payments) Regulations 1998, SI 1998/3175.

The concept of a ‘very large’ company also applies for accounting periods beginning on or after 1 April 2019. Very large companies are required to pay QIPs before the accounting period end, which is earlier than the payment schedule for large companies.

For guidance on the calculation of the QIPs and potential interest charges, please refer to the Calculating QIPs guidance note.

Definition of a large company

A large company is one whose ‘profits’, in an annual accounting period, exceed £1.5m. However, if it is the first accounting period in which the company falls within the definition of large, the threshold is £10m. Also, if its total liability for the period does not exceed £10,000, it will not be large.

‘Profits’ are defined as ‘augmented profits’ within the meaning of CTA 2010, s 279G. Augmented profits comprise the company’s taxable total profits of the period (CTTPP), plus any ‘exempt ABGH distributions’ and any ATED-related and non-resident capital gains tax (NRCGT) gains to the extent where those gains are otherwise subject to capital gains tax (this may be relevant for disposals of residential property made prior to 6 April 2019).

The term ‘exempt ABGH distribution’ means a distribution which is exempt for the purposes of CTA 2009, Part 9A (company distributions) and is only a distribution because it fal

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