Every limited company in the UK pays Corporation Tax as it is a legal responsibility. However, mistakes can happen. You may pay too little or too much tax. If this happens, you don’t need to panic because you may be entitled to reclaim overpaid corporation tax UK. This means you can recover money that belongs to your business.
Let’s find out more about how you can reclaim overpaid corporation tax, when to reclaim it, eligibility requirements, and the steps involved in claiming your refund.
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What is a Corporation Tax Refund?
A Corporation Tax refund is money repaid by HMRC where a company has paid more Corporation Tax than it was legally required to pay. Usually, this happens due to tax credits applied retroactively, overestimations during the year, or carrying back a financial loss to reduce tax liabilities from previous years.
Can I Reclaim Overpaid Corporation Tax UK?
Yes. If your company has paid more Corporation Tax than it legally owes, you may be able to reclaim the overpayment from HMRC.
You can claim overpaid tax, including Corporation Tax in the UK. If you have paid more tax than you actually owed, you can get the excess back from HM Revenue and Customs (HMRC). This happens when you claim missing expenses, correct your Company Tax Return (CT600), or apply reliefs like trading losses or Research and Development (R&D) tax credits.
When you update your figures, HMRC recalculates your tax position. If you have overpaid, it will either refund the money directly to your company bank account. You can also request to use the fund to cover other outstanding tax liabilities. To reclaim overpaid Corporation Tax UK, you need to submit an amended or final CT600 within 12 months of the filing deadline.
Who Can Reclaim Overpaid Corporation Tax UK?
If you are a limited company in the UK and have paid more Corporation Tax than was due, you can apply for a refund. You may qualify if your tax return contained errors, you claimed additional tax reliefs after filing, submitted amended accounts, and your business incurred losses that reduce previous tax liabilities.
Moreover, active and dissolved companies may reclaim Corporation Tax in certain circumstances, but different rules may apply.
What Are the Common Reasons Businesses Overpay Corporation Tax?
You can reclaim overpaid Corporation Tax UK, but you need to learn the common reasons you overpay corporation tax.
You may accidentally overpay Corporation Tax without realising it. Some of the common causes are:
- Making mistakes when preparing the Company Tax Return (CT600) can result in taxable profits being overstated.
- When you omit legitimate expenses, you may pay more tax than necessary.
- Failing to claim available capital allowances on qualifying equipment, machinery, or business assets can increase Corporation Tax liability.
- Not claiming company losses properly can result in overpaid tax.
- If your company’s accounts are corrected later after filing, the revised tax calculation may show an overpayment.
When Can You Reclaim Overpaid Corporation Tax UK?
You can claim corporation tax back in these circumstances:
Overpayment of Corporation Tax
You definitely can reclaim overpaid corporation tax if your company has paid more Corporation Tax than it actually owed for an accounting period. In such a situation, HMRC refunds the excess. Overpayments can happen due to amended tax returns, calculation errors, or higher-than-expected instalment payments.
R&D Tax Relief
If your company is investing in qualifying research and development activities, then you may be eligible for R&D tax relief. Depending on which R&D relief regime your company qualifies for, eligible claims may reduce Corporation Tax or generate a payable credit. This means HMRC may issue a cash repayment for loss-making companies.
Trading Losses
If you make a trading loss, you may also reclaim overpaid Corporation Tax UK. Losses can be carried forward or carried back in certain circumstances. Where a claim is made, it can lead to a Corporation Tax repayment from HMRC.
Terminal Losses
You can claim Terminal Loss Relief if your company stops trading. This allows trading losses incurred within the 12 months of trading to be carried back and offset against profits from up to the previous three years. However, you need to ensure that those profits relate to the same trade. This can result in an HMRC Corporation Tax refund.
Creative Industry Tax Reliefs
If you are one of the UK’s qualifying creative sectors, you may be eligible for creative industry tax reliefs. These reliefs can reduce Corporation Tax payable or generate a payable tax credit. As a result, you can reclaim overpaid Corporation Tax UK.
Can I Get a Corporation Tax Refund If I Made a Trading Loss?
You can claim a Corporation Tax refund if your UK company has made a trading loss. You can claim the loss against profits from the current, previous, or future accounting periods, depending on the rules.
A refund may arise where losses are carried back and set against profits from a previous accounting period, reducing the tax previously paid. Additionally, if your company is ceasing to trade, you may also apply for Terminal Loss Relief.
This relief allows trading losses from the final 12 months of trading to be carried back and offset against profits from up to the previous three years. However, these losses must relate to the same trade.
How to Reclaim Overpaid Corporation Tax UK?
To request a refund from HMRC, you must be registered for Corporation Tax. Create a Government Gateway account and receive a unique tax reference (UTR) for the company.
You can reclaim Corporation Tax if you have filed your CT600 form and have already paid your corporation tax. Look at the following steps for making a claim:
Review Your Corporation Tax Return
The first step to reclaim overpaid Corporation Tax UK is to check your company accounts, CT600 return, and tax computations. You may also need to check payment history and HMRC correspondence. Also, check for discrepancies that could have resulted in an overpayment.
Find the Errors and Correct Them
Your Company Tax Return may contain errors. You can amend it within the permitted amendment period. Make sure all your supporting calculations are accurate before submitting corrections.
Contact HMRC
If your review shows that your company has overpaid Corporation Tax, you can contact HMRC to request a repayment. HMRC may ask for your company details, Unique Taxpayer Reference (UTR), supporting calculations, accounting period, and evidence explaining the overpayment.
Wait for HMRC Review
Once you submit your claim to reclaim overpaid Corporation Tax UK, HMRC will review it. It may request additional evidence before approving the refund. The processing time varies, depending on the complexity of the case.
Receive Your Refund
Once HMRC approves your request, it will refund the overpaid amount directly to your company’s bank account or use it against other outstanding tax liabilities.
What Documents Do I Need to Reclaim Overpaid Corporation Tax UK?
You need the following documents to support your claim:
- Company accounts
- CT600 Corporation Tax Return
- Corporation Tax payment records
- Bank statements
- Revised financial statements
- Tax computation schedules
Without these documents, you cannot reclaim overpaid Corporation Tax Uk efficiently.
How Long Does a Corporation Tax Refund Take?
Typically, a Corporation Tax refund can take up to 40 working days to process once your valid claim or tax return (CT600) is received. However, during peak filing seasons, the wait times can stretch to 12 weeks or more.
If you don’t receive your refund within this time, it’s advisable to chase up the claim. For proper guidance, you can check the official HMRC website. It explains when you can expect a reply to your tax enquiry.
How To Avoid Future Corporation Tax Overpayments?
You can reduce the risk of overpaying by:
- Keeping complete financial records
- Maintaining accurate bookkeeping
- Reviewing tax returns before submission
- Claiming all available business expenses
- Considering available tax reliefs and allowances
- Regularly reconciling Corporation Tax payments
Will HMRC Pay Interest on a Corporation Tax Refund?
In some cases, HMRC pays repayment interest on Corporation Tax that has been overpaid. Whether interest is payable depends on the circumstances of the overpayment and when the tax was originally paid.
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To Sum Up
If your business has paid more Corporation Tax than necessary, you must reclaim overpaid corporation tax UK on time. This can help recover valuable funds and improve your company’s financial position. Overpayments can result from calculation errors, missed tax reliefs, or incorrect returns. Therefore, you need to be careful about your financial records, tax returns, and claiming business expenses.
If you need assistance with your Corporation Tax repayment claims, we are here to assist. At CheapAccountantsInLondon, our tax experts can review your Corporation Tax returns and keep accurate financial records.
Additionally, they can ensure all eligible expenses and reliefs are claimed, helping you to prevent unnecessary overpayments in the future. If you suspect your business has paid too much tax, don’t panic and speak to our qualified accountants in the UK. Get a quote now!
Disclaimer: This article provides general information on reclaiming overpaid corporation tax UK and should not be relied upon as a substitute for personalised tax advice.