Quarterly instalment payments changes

Changes to the quarterly instalment payments (QIPs) regime for 'very large' companies

A new quarterly instalment payments (QIPs) regime for very large companies commenced for accounting periods beginning on or after 1 April 2019.

For accounting periods beginning on or after 1 April 2019, very large companies will be required to make payments four months earlier than they are currently required to do.

For a 12-month accounting period, payments will therefore be due in months 3, 6, 9 and 12 of the period to which the liability relates, as opposed to months 7, 10, 13 and 16 under the current “large” company rules.

Only “very large” companies are affected by the changes and these are defined in the regulations as companies whose annual taxable profits exceed £20 million.

As with the current “large” company rules this threshold is adjusted if the company is a member of a group or has an accounting period shorter than 12 months.

For example if there are 5 related group companies (RGCs) the threshold for the new regime rules to be applicable will be, £20 million divided by 5, i.e. £4 million.

For companies with annual taxable profits of £20 million or less as adjusted for RGCs or short peiods, payment dates will not change.

Payments of the bank levy by financial services companies or ring fence corporation tax (CT) by oil and gas companies will be unaffected by these changes.

The key impact of these changes for companies classed as “very large” under the new rules will be on cash flow. Not only will QIPs now be payable earlier, but in the first year the new regime will be applicable, the first QIP will be due before the final QIP of the previous accounting period subject to the old regime, and only two months after the third QIP.

quarterly instalment payments changes

For example “very large” companies with a 12 month accounting period ended December, payments will be due as follows:

 Old regime –
y/e 31 Dec 2019
New regime –
y/e 31 Dec 2020
QIP 114 July 201914 Mar 2020
QIP 214 Oct 201914 June 2020
QIP 314 Jan 202014 Sept 2020
QIP 414 Apr 202014 Dec 2020

Companies should ensure they plan for the implications this change could have on cash flow. In addition, forecasting taxable profits at such an early stage in the accounting period could cause issues for companies.

If a company’s annual taxable profits exceed £20 million or as adjusted for the first time it will fall immediately into the new regime for that accounting period, i.e. there is no ‘period of grace’.

Please note that this factsheet is for general information purposes only. You should seek professional advice before you take any action or refrain from as a result of information contained herein. Date created: 5.7.19

For more information

For more information, please contact our tax advisory team:

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