Changes and issues affecting the Corporation Tax online service

Service issues

Annual investment allowance

The Autumn Budget 2021 extended the annual investment allowance provisional £1 million cap until 31 March 2023. The extension of the temporary £1 million cap was originally due to revert to £200,000 on 1 January 2022, but this will now happen on 1 April 2023.

The Corporation Tax online service will be updated to reflect this change infrom summer16 September 2022. You can file online before the service is updated if you’re filing a return and you do not need to claim this additional annual investment allowance.

Loans to participators

The Autumn Budget 2021 raised the rate of tax charged under section 455 on loans to participators from 32.5% to 33.75% from 6 April 2022.

The Corporation Tax online service will be updated to reflect this change infrom summer16 September 2022. You can file online before the service is updated if you’re filing a return and you do not need to report this increase.

Companies claiming non-trading losses in respect of intangible fixed assets

HMRC is aware of an online filing issue due to a restriction within the Corporation Tax online service

You will only be affected if both the following apply:

• you are claiming brought forward non-trading losses on intangible fixed assets as well as losses arising in the current period in box 265
• the figure in box 265 exceeds the entry in box 830

The guidance for the completion of these boxes is correct but will result in error 9172 — Box 265 must be less than or equal to Box 830.

The service will be updated on 6 April 2023 to remove this error. If you are affected and need to file a return before this date, you should:

• enter the same amount in box 830 as entered in box 265
• include an explanation of the correct figure for box 830 in the computation
• make sure the computation included for the purpose of box 265, records the actual non-trading loss arising in the current period

Research and Development claims

In 2021, HMRC introduced supplementary form CT600L for companies claiming either of the following credits:

• small and medium enterprise (SME) Research and Development payable tax credit
• Research and Development expenditure credit

Companies only claiming Research and Development enhanced expenditure do not need to complete this supplementary form and just use box 660 on the CT600 to report their claim.

Due to a recent update to the CT600 and CT600L forms, HMRC are aware that a small number of customers may have online filing issues because of some restrictions within the revised HMRC Corporation Tax online service.

Companies claiming Research and Development enhanced expenditure, but not not SME payable payable tax credit or Research and Development expenditure credit

You will only be affected if both the following apply:

• your accounting period starts on or after 1 April 2022
• you’re only claiming Research and Development enhanced expenditure (included in box 660) but no other Research and Development credits so would not be completing a CT600L

Companies claiming Research and Development expenditure credit and reporting Income Tax deducted from profits

You will only be affected if you are reporting both:

• an amount carried forward under section 104N(2), step 2 of the Corporation Tax Act 2009, from a previous accounting period (included in box L5)
• Income Tax deducted from profits (included in box L35)

Companies claiming Research and Development expenditure credit for a period prior to 1 April 2022 and have a Step 2 restriction carried forward to the next accounting period

You will be affected if your accounting period is prior to the 1 April 2022 and you have a step 2 restriction carried forward to the next accounting period greater than zero in box L65.

Small and Medium Enterprise companies claiming Research and Development expenditure credit but not SME payable tax credit

You will be affected if you are reporting Research and Development expenditure credit claims in boxes L185 and L190 but not claiming Research and Development payable tax credit in box L170.

Companies claiming Small and Medium Enterprise Payable Tax Credit

If you’re claiming Research and Development payable tax credit in box L170, for an accounting period starting on or after 1 April 2021, you must give additional information by completing either of the new boxes L167 or L168. The online service has currently applied this rule to all accounting periods.

If your accounting period starts before the 1 April 2021 and your software has not been updated or you choose not to provide this additional information you may be affected by this issue.

The service will be updated infrom summer16 September 2022 to fix all the above listed Research and Development issues and if you’re affected, you should wait until then to file your return.

Companies reporting an amount of brought forward step 2 restriction but not claiming any Research and Development expenditure credit (RDEC) in the current accounting period

IfYou will only be affected if you have a Step 2 restriction brought forward from previous accounting periods in box L5 but do not have either a RDEC claim in box L15 or Step 3 amounts from a previous accounting period in box L20.

The service will not be updated until 6 April 2023 to fix this issue, if you’re affected, you will need to file a paper return.

If you’re affected or have an urgent requirement to file your return before the service is updatedupdated, HMRC will accept a paper return.

Inreturn thisand instance, you should filefollow this guidance

Filing a paper return

You which must include:

• form WT1, explaining (in box 6) that your Research and Development claim cannot be filed online — place this form under your return
• form CT600
• form CT600L
• your accounts and computations

Send your paper return to:

Companies claiming Research and Development expenditure credit and reporting an amount of brought forward step 2 restriction to be carried forward to the next accounting period

This is for information only as it will not affect your ability to submit a CT600L to the HMRC Corporation Tax online service.

A new pre-step 1 section has been added to the CT600L for you to report the amount of step 2 restriction brought forward from previous accounting periods. Any balance not used and carried forward to the next accounting period is captured in new boxes L8 and L129.

The figure in box L129 is correctly included in box L140 — balance carried forward to next accounting period, but has been captured twice in box L150 — total carried forward to next accounting period. This means that your software will be reporting an incorrect figure in box L150, but this is used by HMRC for statistical purposes only.

The figure in box L129 will be the one included in box L5 in your next Corporation Tax Self Assessment.

This is for information only as it will not affect your ability to submit a CT600L to the HMRC Corporation Tax online service.