A few basics first:
- CT61 does not apply when a company in the UK pays interest to another company in the UK
- If you are seeking loans or investment make sure you check the FCA rules as it could be a regulated activity
- CT61 payments are quarterly and based on when payment is made
- The rules are not optional
- Its a deduction of Income Tax paid directly to HMRC
- The lender may be able to get the tax back on their self assessment return
- The borrower should give the lender a statement showing the Gross, 20% Tax and Net payment – HMRC R185 Certificate of deduction of interest
What does CT61 apply to and what form do you need?
If your company or organisation pays interest, royalties, alternative finance payments, manufactured payments, relevant distributions or any similar recurring payment, you must generally make these payments after deducting Income Tax at the basic rate – currently 20%. You need to tell HMRC about these payments and pay the Income Tax that you’ve collected. Use form CT61 for companies.
If you are an LLP you must send a letter and clearly state that you are a LLP and quote your Unique Taxpayer reference with details of the payment made and the tax deducted to:
Self Assessment
HM Revenue and Customs
BX9 1AS
How do apply for CT61?
To get a CT61 you have to complete the e mail template
HMRC: Structured Email (tax.service.gov.uk)
Nil Returns
Unlike other taxes you don’t need to file Nil Returns (see ‘When must I send a CT61’ section of CT61 notes)
But if you do need submit a return you need to do it within 14 days of the return period
Penalties
The CT makes this a Corporation Tax return so penalties should be inline with Corporation Tax penalties
| Time after your deadline | Penalty |
|---|---|
| 1 day | £100 |
| 3 months | Another £100 |
| 6 months | HM Revenue and Customs (HMRC) will estimate your Corporation Tax bill and add a penalty of 10% the unpaid tax |
| 12 months | Another 10% of any unpaid tax |
