What is HMRC Form CT61?
Updated: Jul 19
HMRC Form CT61 is a crucial document used by companies and organisations in the United Kingdom to report certain types of payments and to pay the Income Tax collected from these payments to HM Revenue & Customs (HMRC). The form is typically used when a company or organisation pays interest, royalties, alternative finance payments, manufactured payments, relevant distributions, or any similar recurring payment.
If an enterprise makes payments like interest, royalties, finance bills, payments for manufactured payments, and relevant distributions, it should typically make those payments after deducting income tax at source, at the primary charge - presently 20%. It needs to inform HMRC about these bills and pay the income tax that it has collected through these payments.
In short, the CT61 form is used to report the amount of tax that has been deducted from these payments and to pay this amount to the HMRC. It must be completed and submitted on a quarterly basis, even if no payments have been made during that period unless you are an LLP (Limited Liability Partnership).
When completing the CT61 form, companies must provide details of the payments they have made during the period in question, including the amount of tax that has been deducted. They must also provide details of the recipients of the payments, including their name and address, and their Unique Taxpayer Reference (UTR) number if they have one.
The CT61 form is a document that companies must complete and submit to the HMRC when they make certain payments that are subject to the Income Tax on Company Payments.
These payments include:
Interest on loans
Royalties
Annuities
Income from purchased life annuities
Patent income
Income from the use of intellectual property
Payments made under certain contracts for the use of land
Certain payments for the use of movable property
The Income Tax on Company Payments is levied at a rate of 20%. This means that companies must deduct 20% from the payments they make to the recipients and pay this amount to the HMRC. The CT61 form is used to report the amount of tax that has been deducted and to pay this amount to the HMRC.
The Purpose of Form CT61
Companies are generally required to make these payments after deducting Income Tax at the basic rate, which is currently 20%. The deducted tax is then paid to HMRC using Form CT61. However, it's important to note that limited liability partnerships (LLPs) do not use Form CT61. Instead, LLPs must send a letter to HMRC detailing the payment made and the tax deducted.
The Return Period
Each return relates to a return period, which is usually a three-month period. At the end of each return period, companies send in a CT61 Return showing their payments for that period. Return periods are fixed by law. If tax is shown in box 22 of the form, the company must pay it, without demand, within 14 days after the end of the return period.
Special Cases
There are some special cases where companies do not need to deduct basic rate tax. These include donations to charities, interest on quoted Eurobonds, and payments made by a company to another company that is resident in the UK or is carrying on a trade in the UK and is chargeable to UK Corporation Tax on this income.
Completing CT61
Companies cannot download Form CT61 but can request it online through the HMRC website. If a company is an LLP, it must send a letter to HMRC stating that it is an LLP and quote its Unique Taxpayer reference with details of the payment made and the tax deducted.
You can request FormCT61 by completing an online form here.
Agents can request FormCT61 by completing an online form here.
The CT61 form must be completed and submitted to the HMRC on a quarterly basis, even if no payments have been made during that period. The deadlines for submitting the form and paying the tax are:
14th April 2023 for the period ending 31st March 2023
14th July 2023 for the period ending 30th June 2023
14th October 2023 for the period ending 30th September 2023
14th January 2024 for the period ending 31st December 2023
When completing the CT61 form, companies will need to provide details of the payments they have made during the period in question, as well as the amount of tax that has been deducted. They will also need to provide details of the recipients of the payments, including their name and address, and their Unique Taxpayer Reference (UTR) number if they have one.
The CT61 form must be completed accurately and submitted on time to avoid penalties and interest charges. If a company fails to submit the form or pay the tax on time, it may be liable to penalties and interest charges. The penalties for late submission and payment are:
£100 for the first late submission
£200 for the second late submission
£300 or 5% of the tax due, whichever is greater, for the third and subsequent late submissions. Interest will also be charged on any tax that is paid late.
In addition to the CT61 form, companies may also be required to complete other forms and returns relating to their tax affairs. For example, they may need to complete a Corporation Tax return if they are liable to pay Corporation Tax on their profits. They may also need to complete a VAT return if they are registered for Value Added Tax (VAT).
Thus CT61 form is an important document that companies must complete and submit to the HMRC when they make certain payments that are subject to the Income Tax on Company Payments. This tax is levied at a rate of 20%, and the CT61 form is used to report and pay this tax. Companies must ensure that they complete the form accurately and submit it on time to avoid penalties and interest charges.
How Can a Tax Accountant Help You Manage Your Company's Corporate Tax?
Managing corporate tax can be a complex and time-consuming task for businesses. It involves understanding intricate tax laws, filing accurate returns, and planning for future tax liabilities. This is where a tax accountant comes into play. A tax accountant is a professional who specialises in managing tax affairs and can provide invaluable assistance in navigating the labyrinth of corporate tax.
Understanding Tax Laws
One of the primary roles of a tax accountant is to understand and interpret tax laws. The UK tax system is complex, with frequent changes and updates to legislation. A tax accountant stays abreast of these changes and ensures your company complies with all relevant laws. They can explain these laws in simple terms, helping you understand your company's tax obligations and potential liabilities.
Accurate Tax Filing
Filing corporate tax returns can be a daunting task. It involves collating financial data, calculating tax liabilities, and submitting the necessary documentation to HMRC. A tax accountant can streamline this process. They ensure that your tax returns are accurate, complete, and submitted on time, thereby avoiding penalties for late or incorrect submissions.
Tax Planning and Strategy
A tax accountant can also assist with tax planning and strategy. This involves analysing your company's financial situation and planning for future tax liabilities. They can advise on strategies to minimise tax liabilities, such as making use of allowances, deductions, reliefs, and exemptions. This proactive approach to tax management can result in significant savings for your company.
Dealing with HMRC
Interactions with HMRC can be challenging and stressful. Whether it's responding to an enquiry, negotiating a payment plan, or dealing with a tax investigation, a tax accountant can act as an intermediary between your company and HMRC. They can handle communications, negotiate on your behalf, and ensure that your company's interests are protected.
Audit Support
If your company is subject to a tax audit, a tax accountant can provide invaluable support. They can help prepare for the audit, liaise with the auditors, and respond to any queries or issues that arise. Their expertise can help ensure that the audit process goes smoothly and that any potential issues are addressed promptly and effectively.
Training and Advice
A tax accountant can also provide training and advice to your company's staff. They can help your finance team understand tax laws and regulations, improve their tax accounting skills, and ensure they are aware of the latest changes and developments in the tax world. This can enhance your company's internal tax management capabilities.
A tax accountant can provide a wide range of services to help manage your company's corporate tax. From understanding tax laws and filing accurate returns, to strategic tax planning and dealing with HMRC, their expertise can be invaluable. By hiring a tax accountant, you can ensure that your company's tax affairs are in safe hands, leaving you free to focus on running and growing your business.