Company Tax Return requirements for quarterly instalment payers of Corporation Tax and those eligible for Marginal Relief

The Small Profits Rate of Corporation Tax and Marginal Relief were introduced with effect from 1 April 2023. At the same time, the related 51% group companies test (that applied to quarterly instalment payers, patent box and others) was replaced by the associated companies rules.

HMRC updated the CT600 Company Tax Return guide in respect of boxes 326, 327, 328, 625, 630 and 631 on 10 September 2024. This update clarified the correct box to be completed, for the application of the related 51% group companies test for quarterly instalment payers. We understand this has caused some confusion as some companies have been asked to resubmit their return.

If a company’s accounting period straddles 1 April 2023 (for example, 1 January 2023 to 31 December 2023), quarterly instalment payers will still apply the related 51% group company test across the whole period. Unfortunately, this figure cannot be entered into box 625 as a cut-off date was required to ensure companies are completing the correct box from 1 April 2023 for the associated companies rules.

Companies should instead use box 326 to report the number of 51% group companies only for accounting periods that straddle 1 April 2023. This ensures that, despite the limitations that exist in the flexibility of the use of the CT600 boxes, returns are as closely aligned as possible to the legislation and will be accepted upon submission.

HMRC will not require companies to submit amendments to Company Tax Returns submitted prior to 10 September 2024 to reflect the amended guidance.

Returns submitted from 10 September 2024 should follow the current published CT600 guidance. You will only need to submit an amended return if there is a change to something other than the number of associated or group companies on your return.