HMRC Holds £11.9bn in Overpaid Corporation Tax
In the last tax year, UK businesses overpaid a staggering £11.9 billion in Corporation Tax. That’s a huge amount, but the worst part is that unless business owners realise they’ve made a mistake by overpaying and ask for those funds to come back, HMRC won’t issue a refund.
If this applies to you, you’ll need to reclaim those overpayments and put them back where they belong – in your pocket!
Given the pressure so many businesses are under at the moment, having this much-needed cash tied up could be hugely detrimental.
How does this happen?
The issue usually arises when larger businesses pay their Corporation Tax based on estimated profits for the upcoming year. In some cases, their accounts teams overestimate profits, to ensure there are no interest charges levied if an underpayment is made, leading to an eventual overpayment in Corporation Tax.
The problem becomes even more likely when a company’s profits have fallen compared to the previous year, as is likely since the pandemic.
Why don’t HMRC automatically refund these amounts?
As far as HMRC are concerned, it’s simply not their job. As a result, the money will sit in HMRC’s account, earning a paltry rate of interest.
It’s up to businesses to reclaim any overpayment, in the same way as any overpaid Income Tax amounts.
Do you need to worry?
If you’re a client of ours, no, you don’t need to worry! We’ll calculate any Corporation Tax you need to pay each year, warn you of the due date for that payment, and remind you just before it’s due, and ensure that any overpayment is reclaimed.
We’ll also chase for that refund if you let us know it hasn’t arrived!
For those who are not currently clients but might need some advice, we’re here to help! You can check your Corporation Tax position by logging into your HMRC account via the Government Gateway. Any overpayment that may have been made will be sitting waiting for you to reclaim it.
If you’d like any advice on how to double check or to reclaim any overpayment you may find, please get in touch with us.
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