Background
HM Revenue & Customs (‘HMRC’) generally issue a corporation tax payment reminder about a month before the normal payment date, unless the company has already submitted its corporation tax return. Where a company has an agent appointed with HMRC this reminder will go to the agent only.
HMRC is keen to encourage companies and agents to use its digital services and as part of this HMRC have recently announced that with effect from July 2025 a trial has begun whereby they have stopped sending corporation tax reminder letters. Initially, only a small number of companies that have agents will be included in the trial.
Detail
As part of HMRC’s efforts to improve its services by sending and receiving taxpayer information digitally, from July 2025 HMRC are conducting a trial which involves not sending Corporation Tax (CT) return and payment reminder letters (CT208) to 5% of companies that have an authorised agent. However, HMRC may extend the trial to more companies, including companies that do not have agents, as the trial progresses.
HMRC wish to monitor the impact on the removal of these letters on managing corporation tax debt. The trial is due to end in December 2025. Should the trial have a negative impact and see a substantial increase in corporation tax debt then HMRC has stated that they will halt the trial completely.
Companies can use their business tax account to view liabilities and payments. It is important that tax is paid on time to avoid the company having to pay interest. The current rate of interest is 8.25%, falling to 8% from 27 August 2025 following the latest interest rate change (6.75% for underpaid quarterly instalment payments, and reducing to 6.5% with effect from 18 August 2025).
HMRC are also trialling the removal of paper copies of some other non-statutory corporation tax letters. From June 2025, HMRC have no longer been automatically send the following letters:
- CT205/A return reminders for companies and agents
- CT207 interest statement
- CT209 payment receipt
- CT603A agent list of issued notices to deliver Company Tax return
- CT608 instalment payment reminder
HMRC will continue to send statutory corporation tax letters, including the ‘Notice to file a Company Tax Return’.
Generally, most of our client’s will not notice any change as a result of this trial but for those companies without a tax agent then they are advised to closely monitor the situation in case HMRC should decide to expand the trial.
It is also a good opportunity to act as a reminder of the quarterly instalment payment (QIP) rules, particularly as it will be important for those companies falling under the QIP rules to closely monitor their payment position given they can no longer rely on a reminder from HMRC.
As a brief reminder, large companies, that is companies with taxable profits of more than £1.5 million for an accounting period, are required to settle their corporation tax liability by making quarterly instalment payments (QIPs). The first payment is due six months and 13 days after the beginning of the accounting period, with further instalments then due every 3 months, and the final instalment due three months and 14 days after the end of the accounting period.
The large company threshold of £1.5 million is divided by the number of associated companies at the end of the previous accounting period, as well as being reduced proportionally for accounting periods of less than 12 months.
In addition, a company is not classed as being large if:
- its tax liability for the accounting period is £10,000 or less, reduced pro-rata for accounting periods of less than 12 months; or
- its profits for the accounting period do not exceed £10 million and it was not a ‘large’ company in the previous 12 months.
Again these thresholds are divided by the number of associated companies and reduced proportionally for accounting periods of less than 12 months.
Companies with annual taxable profits in excess of £20 million will be classified as ‘very large’, and will be required to make QIPs 4 months earlier than is the case for a large company. The payment dates for a very large company with a 12 month accounting period will therefore start with the first instalment being due 2 months and 13 days after the beginning of the accounting period. The £20 million threshold is also divided by the number of associated companies and reduced proportionally for accounting periods of less than 12 months.
If you would like any advice or assistance with making corporation tax payments, or alternatively would like to discuss any of the issues above, then please contact our Tax Director, Jenny Marks.
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