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 Example Two
A notice to file for the 12 months ended 31 December 2005 is issued in January 2006. This accounting period is included in a period of account that runs from 1 January 2005 to 31 December 2006. The filing date for the accounting period is 30 June 2007 and the amendment date 30 June 2008. This is less than two years after the end of the period of account (31 December 2008).
A company is unlikely to be disadvantaged by the change. In Example Two the company would have to submit its return before 30 June 2007 (the filing date) at a time when the remuneration was unpaid. The remuneration would then have to be paid on or before 30 September 2007. Under the change the company would still have nine months to “claim” the relief (compared with 15 months under section 43(5)(b) or 44(5)(b) of FA 1989).
In practice periods of account longer than 18 months are unusual and nearly all companies affected by the provision claim the deduction in their original return.
This change puts the method of allowing relief on the same basis as that in paragraph 6 of Schedule 24 to FA 2003, rewritten in section 1295.
Schedule 24 to FA 2003 is a similar provision to section 43 of FA 1989. It denies a deduction for amounts charged in respect of employee benefit contributions unless the benefits are provided within nine months of the end of the period in respect of which they are charged.
Paragraph 6 of Schedule 24 to FA 2003 deals with the case in which the return is made before the end of the nine month period. Unlike section 43(5) of FA 1989 it does not require a claim. It provides merely that the calculation can be adjusted. This is the most appropriate way of dealing with the point under Self Assessment.
This change has no implications for the amount of tax due, who pays it or when. It affects (in principle and in practice) only administrative matters.