What's new

Following HMRC's response to a number of technical queries, changes to when these boxes are completed, or not, as the case may be, have been made for accounting periods (APs) ending on or after 01/04/2023, as follows:

• box 326 must be completed (unless 0) if:

  • the company is chargeable at the standard small profits rate or marginal relief is claimed, or

  • the company is large (or very large) for quarterly instalment payments (QIPs) purposes

If completed, box 326 will show the number of associated companies as follows:

• the maximum number during the AP if:

  • QIPs apply and the company is chargeable at the standard small profits rate or marginal relief is claimed
  • the Type of company is none of types 1, 2, 3 or 9
• the number at the start of the AP if QIPs apply and the company is neither chargeable at the standard small profits rate nor marginal relief is claimed
• boxes 327 and 328 will not be relevant unless/until there are different upper and/or lower limits in APs straddling two financial years (FYs)

• box 329 will be completed if:

  • box 326 is completed and QIPs apply, and/or
  • box 435 is completed
• box 435 will be completed where the company claims marginal relief
• box 625 will not be completed

A new pre-validation warning is triggered in APs ending on or after 01/04/2023 if QIPs apply and the company is chargeable at the standard small profits rate or marginal relief is claimed.

F(No 2)A 2023 amends the rules relating to relief for charitable donations insofar as relief will only be available for charitable donations to UK charities (those that are subject to the rules of a relevant UK court) and UK CASCs (those that are based in the UK and provide facilities for eligible sports in the UK).

The Relevant territory option for Location has been removed for periods of account starting on or after 01/04/2024 and a validation warning added for accounting periods ending on or after 15/03/2023 and starting before 01/04/2024. New pre-validation warnings/errors also deal with situations where relevant existing data has not been amended.

CT600L box L10 now reports the gross expenditure for RDEC-related claims rather than the net expenditure. This change has involved a number of other significant changes to deal with the various possible scenarios as well as taking the opportunity to make other minor changes. The changes include:

• each R&D claim record where the R&D claim type is RDEC-related (large company or RDEC claims by a SME):

  • now requires the user to specify if the amount allocated from the P&L account is net of the RDEC tax credit or gross expenditure, and, if gross, whether or not the P&L account includes the taxable RDEC credit
  • if the allocated amount is gross and no taxable RDEC credit is included in the P&L account, the trading result is adjusted by an addition of the taxable RDEC credit

F(No 2)A 2023 amends how the patent box deduction is calculated if the company's profits are chargeable at the standard small profits rate. In the relevant formula, X% is the Main rate of corporation tax for the relevant financial year (FY) but, for accounting periods ending on or after 01/04/2023, is substituted for the Applicable rate for the relevant FY.

Changes and updates include:

• a change to the reported amounts included in the Report D6 and CT600 box 771 and, for assets in a Special tax site, CT600M box M5E, and so box M10, to exclude expenditure on Structures & buildings for second-hand assets
• validation and a pre-validation error for second-hand assets to prevent the Date brought into use by first owner being left blank
• the Additional pre-April 2020 allowance section and Additional WDA given this period (see below) box on the Structures & buildings screen have been updated so that they are only displayed and completed in the relevant circumstances

F(No 2)A 2023 made provision for new investment zones and essentially renamed freeport tax sites as special tax sites so that the term 'special tax sites' includes former freeport tax sites and new investment zones. Although two new investment zones have been announced, they have yet to be designated with special tax site status.

Consequently, 'freeport tax site' has been replaced with 'special tax site' throughout the software together with all necessary consequential changes including to all relevant reports. The CT600M has not yet been updated by HMRC.

The NBV reconciliation screen has been updated to include Structures & buildings - Special tax sites (these were inadvertently omitted previously). Users will be presented with a notice on opening SCT v4.4 if there are any periods of account in which the fixed asset register includes Structures & buildings - Special tax sites. The notice is also available from the Reporting menu.

The Fixed asset register includes options for FYA - Full expensing and FYA - Part expensing. These are available for expenditure incurred between 01/04/2023 and 31/03/2026 (inclusive) and, if selected, extra fields become available for completion (as with expenditure on which the super-deduction or SR allowance is claimed). On disposal of an asset on which the FYA - Full expensing and FYA - Part expensing was claimed, a special balancing charge arises (as with the disposal of an asset on which the super-deduction or SR allowance was claimed).

The Main rate asset pool, Special rate asset pool and short life assets screens include fields for assets on which FYA - Full expensing and FYA - Part expensing is claimed and for the special balancing charge. The reports for the Main rate asset pool, Special rate asset pool and short life assets include the relevant entries for FYA - Full expensing and FYA - Part expensing and the special balancing charge.

Important note:

Please read this section if you have any client that disposed of an asset on which the SR allowance was claimed.

In v4.4, we have resolved an issue that may affect the data for a small number of users/clients. We have identified a scenario where the disposal of an asset on which the SR allowance was claimed was not dealt with correctly.

The disposal of an asset on which the SR allowance was claimed where there is no other related expenditure:

1. gives rise to a special balancing charge equal to 50% of the disposal proceeds, and
2. the balance of the disposal proceeds being taken to the special rate asset pool.

Note that if there is any related expenditure, then the balance of the disposal proceeds after deducting amounts a and b is the disposal proceeds for that related expenditure and must be entered in the asset representing that other expenditure.

The amount at point b above was not included in the special rate assets pool. This resulted in the amount on which any WDA is calculated (and so the WDA claimed) being too high and so the resulting tax written down value carried forward being too high. This has consequences for the overall result for the business activity concerned in the period in which the disposal occurs (e.g. understated profit or overstated loss and loss relief) and, in the following period(s), the tax written down value brought forward being overstated and an excessive loss brought forward (if a loss was carried forward).

We have made changes to correct the issue but you should review your client's data and, if there is disposal of an asset on which the SR allowance was claimed (whether or not there is any related expenditure), you follow the steps under Action for users below.

Action for users

Since the SR allowance could only claimed on expenditure incurred between 01/04/2021 and 31/03/2023 (inclusive) and the disposal of such assets is not expected to be commonplace, it is likely that there are relatively few instances where users' action is needed.

Important note: Please read this section if you have any client that disposed of an asset on which the SR allowance was claimed.

In v4.4, we have resolved an issue that may affect the data for a small number of users/clients.

We have identified a scenario where the disposal of an asset on which the SR allowance was claimed was not dealt with correctly.

The disposal of an asset on which the SR allowance was claimed where there is no other related expenditure:

gives rise to a special balancing charge equal to 50% of the disposal proceeds, and

the balance of the disposal proceeds being taken to the special rate asset pool.

Note that if there is any related expenditure, then the balance of the disposal proceeds after deducting amounts a and b is the disposal proceeds for that related expenditure and must be entered in the asset representing that other expenditure.

The amount at point b above was not included in the special rate assets pool. This resulted in the amount on which any WDA is calculated (and so the WDA claimed) being too high and so the resulting tax written down value carried forward being too high. This has consequences for the overall result for the business activity concerned in the period in which the disposal occurs (e.g. understated profit or overstated loss and loss relief) and, in the following period(s), the tax written down value brought forward being overstated and an excessive loss brought forward (if a loss was carried forward).

We have made changes to correct the issue but you should review your client's data and, if there is disposal of an asset on which the SR allowance was claimed (whether or not there is any related expenditure), you follow the steps under Action for users below.

Action for users

Since the SR allowance could only claimed on expenditure incurred between 01/04/2021 and 31/03/2023 (inclusive) and the disposal of such assets is not expected to be commonplace, it is likely that there are relatively few instances where users' action is needed.

Where action is needed, this will depend on the specific circumstances of each client; but broadly, users should:

• Review periods where there is any disposal of an asset on which SR allowance was claimed and each following period (whether or not there is such a disposal).

• For the earliest period where there is any disposal of an asset on which SR allowance was claimed:

  1. Amend any WDA claim for amount not claimed (if relevant/appropriate) in the special rate asset pool (SRAP) for each relevant business activity
  2. Note the revised TWDV c/f in the SRAP for each relevant business activity [this will need to be used in the next period]
  3. Make or amend any loss claim relief claims for each relevant business activity to ensure these are based on the revised loss (if any)
  4. Note the revised loss c/f (if any) for each relevant business activity
  5. File an amended return online (if within the relevant time limits) if the original return has been filed
  6. Pay any additional tax liability

• For each next period in turn:

  1. Amend the TWDV b/f in the SRAP for each relevant business activity to agree with the revised TWDV c/f in the previous period
  2. Amend the loss b/f (if any) for each relevant business activity to agree with the revised loss c/f (if any) in the previous period
  3. Repeat steps a to f above

HMRC has confirmed that companies should not complete the Coronavirus Support Schemes boxes (471 to 474 and 526) in the form CT600 for accounting periods (APs) starting on or after 01/10/2021.

Consequently, the following changes have been included:

• the pre-validation errors about the Coronavirus Support Schemes screen not being completed or being completed by a charity or CASC now only apply to accounting periods (APs) ending on or after 19/03/2020 and starting on or before 30/09/2021
• CT600 boxes 471 to 474 and 526 will only be completed (when relevant) in APs ending on or after 19/03/2020 and starting on or before 30/09/2021 (irrespective of any data entered on the Coronavirus Support Schemes screen)

In a future version of SCT:

• the Coronavirus Support Schemes screen will only be enabled in relevant APs and will be removed for in PoAs starting on or after 01/10/2021
• the Coronavirus Support Schemes Navigator item will only be enabled in relevant PoAs and will be removed for in PoAs starting on or after 01/10/2021

The report now includes the data entered in the Basic details, Contact details and Statutory details sections in the Company Details screen and the CT600 and any relevant Supplementary Pages.

The report lists Company Details in the Table of contents above Section A. The report comprises the cover page, Table of contents page, Company Details Report page, and, for the open period of account, the Tax computations and the CT600 and any relevant Supplementary Pages.

The new form CT600 (2023) is included in v4.3.

The new form CT600F (2023) Tonnage Tax is not included as SCT does not deal with this tax.

The new form CT600N (2023) Residential property developer tax is not included as SCT does not deal with this tax.

The latest HMRC online filing validations ("RIM v1.991") are included in v4.3.

The Spring Finance Bill 2023 (F(No. 2)B 2023) includes the two-year extension to the period during which qualifying expenditure may be incurred. This is included in v4.3 so that qualifying expenditure can be included for expenditure incurred up to 31/03/2025 (previously 31/03/2023).

However, HMRC's online filing systems have not yet been updated and, until they are, any such qualifying expenditure incurred after 31/03/2023 will result in error 9279. You should therefore wait for HMRC to update the online filing system before filing a return where the qualifying expenditure is incurred after 31/03/2023.

For accounting periods (APs) ending on or after 01/04/2023:

• where the company is chargeable at the standard small profits rate, box 326 will be completed. Note: boxes 327 and 328 will not be relevant unless/until there are different upper and/or lower limits in APs straddling two financial years (FYs)
• where the company claims marginal relief, box 435 will be completed,
• where box 326 is completed and the company does not pay CT by quarterly instalment payments (QIPs) and/or box 435 is completed, box 329 will also be completed
• where the company pays CT by QIPs, box 326 will be completed

• the main rate of corporation tax will be applied and the Marginal Relief Calculation screen will not be available where

  • the Non-UK resident company landlord checkbox on the UK Property Details tab is ticked

    Note:

    the standard small profits rate and marginal relief can only apply to UK resident companies.

  • where the Type of company in the Return Information screen is 9 Real Estate Investment Trust C - residual company

    Note:

    this is in addition to the existing cases where the Type of company in the Return Information screen is any of:

    1. Unit trust or open-ended investment company

    2. Close investment-holding company

    3. Company in liquidation chargeable at the main rate.

   

• where QIPs apply, the calculations to determine the payment dates uses the number of associated companies instead of the number of 51% group companies

• box 625 will not be completed;

  HMRC has yet to respond to a technical query about box 625.

New criterion and validation ensures that trade losses can only be surrendered for R&D tax relief where there is a R&D SME enhanced relief claim in the AP. A new pre-validation error ensures the same applies in situations where data is changed elsewhere but the Trade screen is not subsequently saved.

An existing validation has been updated to ensure that trade losses can only be surrendered up to the amount of the R&D SME enhanced expenditure.

Report B6 (Management expenses): has been updated to correctly reflect any surplus QCDs that are carried forward as management expenses.

Report B13 (Charitable donations): some labels have been updated.

The AIA Limits screens has been updated to ensure the £1 million temporary limit applies from 01/01/2019 and does not revert to £200,000 on 01/04/2023.

In addition, following publication of F(No. 2)B 2023, the temporary £1 million limit will become a permanent £1 million limit and without the former transitional provisions limiting the AIA in the part of the AP after 31/03/2023 applying in APs straddling 01/04/2023.

SCT has been updated to include the rate changes legislated in FA 2023 with effect from 01/04/2023, as follows:

• R&D SME scheme: the enhanced additional deduction in calculating the trading result is reduced from 130% to 86% and the rate applied to payable tax credits is reduced from 14.5% to 10%.
• RDEC scheme: the rate applied to RDEC is increased from 13% to 20%. Note: because RDEC is 'above the line' and so taxable, SCT applies the above RDEC rates to the qualifying expenditure as 13/87 and 20/80 respectively. You should enter the net expenditure (not the actual gross expenditure) in SCT.

In addition, the labels on some fields have been amended to be consistent with other similar fields elsewhere.