F3-32/95 Tax Relief Grant and Pay and File
Summary: This circular introduces a procedure for obtaining tax relief grant on account.
Legislation: Section 54 of the Housing Act 1988.
This circular supplements F3 - 31/87.
1 Introduction
1.1 Under the Inland Revenue's Pay and File procedure, an association must calculate and pay its tax by nine months after its year end, regardless of whether the tax inspector has issued a final assessment. It must send its computations and accounts to the tax inspector by twelve months after its year end. The tax inspector issues a final assessment only after reviewing the full documentation. Therefore associations may sometimes have to pay their taxes before they receive final assessments.
2 Claiming grant on account
2.1 Circular F3 - 31/87 requires a final tax assessment in support of an application for tax relief grant. This circular introduces a procedure to enable associations to apply for grant on account if they should find themselves in the situation described above.
2.2 Associations may apply for grant on account on the standard application form GRT1, version 5 or later versions. Copies of this are available from the enquiry points below. These are the conditions for payment on account:
(b) The Housing Corporation must have the audited accounts for the period;
(c) Grant will be paid to the Inland Revenue, unless the Inland Revenue's receipt is enclosed, in which case it will be paid to the association;
(d) Applications must include a computation reconciling the estimated tax liability to the audited accounts;
(e) If an association undertakes activities which are not eligible for tax relief grant, its computation should identify the proportion of tax attributable to those ineligible activities and reconcile it to the accounts. Ineligible activities are defined in paragraph 3 of circular F3 - 31/87 and they include the management of property on behalf of another body such as a Business Expansion Scheme company or a private landlord;
(f) It is a condition of grant on account that an association repays without delay any grant found to have been overpaid;
(g) It is a condition of payment on account that an association submits a final claim in due course, to provide a reconciliation, even when there is no difference between the final amount and the amount claimed on account.
In other respects the application should satisfy the same requirements as a standard claim.
3 The final claim following up a payment on account
3.1 Associations may make final claims on form GRT1, version 5 or remaining stocks of version 4.
3.2 If the final assessment reveals that an association under-estimated its tax liability, the Housing Corporation will pay grant on the balance of tax. If the final assessment results in a refund, the Corporation will expect the association to repay grant without delay in respect of the amount refunded, or instruct the Inland Revenue to make repayment directly to the Corporation. The final claim should include a reconciliation of the amount paid on account with that finally claimed.
4 Interest on under - or over payments of tax
4.1 The Inland Revenue may charge interest on the balance payable. The Housing Corporation will not pay grant on any such interest but neither will it claim any interest added by the Inland Revenue to a refund. An association may retain such interest.
4.2 Any association believed to be abusing the on account facility will have it withdrawn. Abuse might be, for example, blatant overestimation of tax in order to gain cash flow and interest benefits and failing to follow up promptly with a final claim which indicates a refund. A documented query pursued with the tax inspector, which results in a reduction from the tax paid on account, would not be regarded as abuse.
5 Enquiries
Please direct enquiries about this circular to the Financial Supervision section of the Performance Review team at the appropriate Housing Corporation regional office.
Printable version
Email
