Annex 1: Minor Changes in the Law Change 68: Unpaid remuneration of employees: payment made after return submitted but within 9 months of the end of the period of account: sections 867, 1250 and 1289 and Schedule 1
This change drops the requirement to make a claim for a deduction for remuneration paid after the return is submitted but within nine months of the end of the period of account in which it is charged.
This change brings the income tax and corporation tax codes back into line in rewriting section 43 of FA 1989. And it is adopted for consistency in rewriting parallel rules in section 44 of FA 1989 and paragraph 113 of Schedule 29 to FA 2002.
Sections 43(5) and 44(5) of FA 1989 deal with profit calculations made within nine months of the end of the period of account. Paragraph (a) of each subsection requires the assumption that any remuneration unpaid at the time of the calculation will not be paid by the end of that nine month period. That means the proposed remuneration cannot be deducted in making the calculation. Paragraph (b) of each subsection provides an adjustment procedure that applies when the remuneration is paid after the calculation is made but before the end of the nine month period. If a claim is made within two years of the end of the period of account the calculation may be adjusted.
There is a parallel rule in paragraph 113(5) of Schedule 29 to FA 2002 which applies to the intangible fixed assets regime.
This change brings the adjustment procedure into line with the normal Self Assessment rules and deals with the adjustment as an amendment to a return. Section 42(7) of TMA sets out the rules for making claims. Schedule 1 to this Act removes the reference to section 43(5) of FA 1989 in paragraph (b) of that subsection and does not replace it.
The change alters the time available for making the adjustment from two years after the end of the period of account in every case to a date that depends on the length of the period of account.
Paragraph 15(4)(a) of Schedule 18 to FA 1998 gives the time limit for making amendments to corporation tax returns. It is 12 months from the filing date for the relevant return.
Corporation tax returns are required for accounting periods. The end of a period of account will always end an accounting period. In the normal case where the company has a 12 month period of account the change makes no difference to the time limit for “claiming” the relief. The filing date is 12 months after the accounting date and the date for amending the return is 12 months after that. This is the same time limit as those in sections 43(5) and 44(5) of FA 1989.
In fact, the time limit for “claiming” the relief is unaffected if the period of account is no longer than 18 months.