COM23172 - Assessing: CTSA assessments: revenue determinations: Example 1

Example 1Ìý

A large company with an established tax history makes up its accounts to 31 December annually.Ìý Its first Accounting Period (AP) is from 01/01/2019 to 31/12/2019 and COTAX identifies it as a ‘Potentialâ€� Quarterly Payer.Ìý

In January 2020, COTAX:Ìý

  • creates the next AP from 01/01/2020 to 31/12/2020Ìý
  • sets the Quarterly Payer signal to ‘Potentialâ€� based on the value of the signal for the previous APÌý
  • issues instalment payslips from June 2020 for the AP ending 31/12/2020Ìý

In December 2020:Ìý

  • the company delivers its return and self assessment for the AP 01/01/2019 to 31/12/2019 with no entry in the Quarterly Instalment Payments boxÌý
  • COTAX processing automatically changes the value of the Quarterly Payer signal from ‘Potentialâ€� to ‘Noâ€� for the AP ended 31/12/2019Ìý

Please note that:ÌýCOTAX does not amend the signal for AP ended 31/12/2020 from ‘Potentialâ€� to ‘Noâ€�.Ìý That AP keeps its inherited value until it is changed manually, or by the capture of a return for that periodÌý

In July 2022:Ìý

  • the AP ended 31/12/2020 appears on the Determination Required No Return List (DRNR) as the company has not delivered its returnÌý
  • the Technical Caseworker decides to make a Revenue Determination for the APÌý

After reviewing the company’s record and previous history, the Technical Caseworker uses Function RAMA (Record/Amend Assessment) to estimate the company’s profits at £525,000.Ìý This exceeds the upper limit, as reduced by 1 plus the number of associated companies shown in the 2019 return.Ìý »Ê¹ÚÌåÓýapp Technical Caseworker changes the Quarterly Payer signal from ‘Potentialâ€� to ‘Yesâ€�.Ìý

COTAX compares the determination figures with the value of the Quarterly Payer signal and displays a warning message, ‘»Ê¹ÚÌåÓýapp figures entered indicate that the QP signal for this AP is incorrectâ€�.Ìý

It does that because COTAX has no information about franked investment income or associated companies, unless you have activated the [Switch to Full] button on screen COT122N to see the ‘fullâ€� form and entered information such as the number of associated companies as shown in the 2019 return.Ìý

»Ê¹ÚÌåÓýapp Technical Caseworker confirms the Quarterly Payer status as ‘Yesâ€� and finishes making the Revenue Determination with Function RAMA.Ìý

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