CA23188 - PMA: FYA: First-year tax credits: restriction of the tax credit payment

CAA01/Sch.A1 para18, ICTA88/s826

If a company claims a first-year tax credit HMRC will pay it an amount in respect of the credit unless any of the following apply:

  • »Ê¹ÚÌåÓýapp company has outstanding corporation tax liabilities. HMRC may use the first-year tax credit (and any interest due on it) to discharge a company’s liability to pay corporation tax. Any tax credit used in this way will be treated as having been paid. »Ê¹ÚÌåÓýapp tax credit will only be used to off set corporation tax that has become due and payable; HMRC cannot use a tax credit to reduce a future liability.
  • »Ê¹ÚÌåÓýappre is an enquiry into the company’s return for the accounting period for which the first-year tax credit is claimed. HMRC may withhold a first-year tax credit payment until the enquiry into the return is completed. However, HMRC has discretion to make a provisional payment before the conclusion of the enquiry.
  • »Ê¹ÚÌåÓýapp company has outstanding PAYE or Class 1 NIC liabilities for payment periods ending in the accounting period. Although HMRC can only use first-year tax credits to cover outstanding PAYE and NICs with the company’s consent, a tax credit payment will not be made to a company that has outstanding PAYE and NICs liabilites. »Ê¹ÚÌåÓýapp meaning of payment period is explained in CA23177.

Top of page

Interest

Interest under ICTA88/s826 is payable on first-year tax credits from the material date until the date the payment is made. »Ê¹ÚÌåÓýapp material date is the later of:

  • the filing date for the company’s tax return for the accounting period of claim, and
  • the date on which the company tax return, or amended return, containing the claim is delivered to HMRC.