Question to the HM Treasury:

To ask the Chancellor of the Exchequer, whether her Department has made an assessment of the potential impact of the quarterly instalment payment regime on companies that realise large but infrequent capital gains, particularly in cases where tax liabilities cannot be known at the point quarterly payments fall due.

If a company or a group's annual profits exceed £1.5 million, they will be classed as ‘large’ and will be required to pay their Corporation Tax in quarterly instalments. This long-standing regime ensures that larger companies pay their Corporation Tax bill closer to the point at which they make a profit, which is in line with other G7 countries.

Companies must self-assess whether they are in the regime and pay accordingly. Where liabilities may be difficult to predict, including from capital gains, companies should make their best estimate of instalment payments based on the information available at the time. Payments can be adjusted up or down as the final liability becomes clearer, and if they prove to be excessive a repayment can be claimed.

As always for late paid tax, interest is charged to reflect the time value of money. Recognising the estimated nature of the instalments, special rates of interest apply which charge less for late payment, and pay more for overpayment, than the normal rates.

The Government keeps the impact of the quarterly instalment payment regime, including associated interest rules, under review.