A surcharge of 8 percent on the profits of banking companies was introduced by Finance (No. 2) Act 2015 and took effect from 1 January 2016. The surcharge is paid alongside a company’s corporation tax liability, and so when an affected company makes a payment to HMRC it must notify HMRC as to the amount that relates to the surcharge. HMRC have now published for consultation a set of draft regulations and an explanatory memorandum that set out the detailed information that must be provided when notifying HMRC of a surcharge payment. This information is intended to simplify both the processing of payments by HMRC and its gathering of statistical information on revenues generated by the surcharge.
The draft regulations would mean that in addition to giving notice of the amount of the surcharge being paid, groups would be required to provide details of the Unique Tax Reference (UTR) of the company the payment relates to and the accounting period it should be allocated to. This corresponds to the information which in practice HMRC already requests companies to provide in relation to payments of corporation tax.
Where companies take advantage of the option to give notice in advance of actually making the surcharge payment, they will also be required to state the date on which payment is intended to be made.
The draft regulations provide for further information to be provided in cases where a surcharge liability is to be settled by a reallocation of amounts already paid to HMRC. This is primarily to assist in identifying the particular payment to be allocated and so includes details such as the original payment date and which company, period and tax the original payment was allocated against.
HMRC is currently designing a standard form for companies to use for these notifications.
The draft regulations will be open for technical consultation until 31 March 2016. HMRC are particularly interested to use this consultation period to explore any significant compliance concerns that banks or building societies might have.