Corporation Tax Act 2009

Delayed payments and bad debts

866 Delayed payment of employees' remuneration

(1) This subsection applies if—

(a) a debit in respect of employees' remuneration is recognised by a company for accounting purposes, and

(b) apart from this section, a debit in respect of the remuneration could be brought into account for the purposes of this Part for the period of account in which the debit is recognised.

(2) No such debit may be so brought into account unless the remuneration is paid before the end of the period of 9 months beginning with the end of the period of account.

(3) If the remuneration is paid after the end of the 9 month period, the debit may be brought into account for the purposes of this Part for the period of account in which it is paid.

(4) Section 867 makes further provision relating to the application of this section.

867 Provisions supplementing section 866

(1) For the purposes of section 866 a debit in respect of employees' remuneration recognised for accounting purposes includes an amount reserved in the accounts of an employer with a view to its becoming employees' remuneration.

(2) For the purposes of section 866 it does not matter if the debit is in respect of—

(a) particular employments, or

(b) employments generally.

(3) Any adjustment required by section 866 of an accounting debit that is partly referable to an amount to which that section applies and partly to other matters must be made on a just and reasonable basis.

(4) In making a calculation for tax purposes that has to be made before the end of the 9 month period mentioned in section 866(2), it must be assumed that any remuneration which is unpaid when the calculation is made will not be paid before the end of that period.

(5) But if the remuneration is subsequently paid before the end of the period, nothing in subsection (4) prevents the calculation being revised and any tax return being amended accordingly.

(6) For the purposes of section 866 and this section, remuneration is paid when it—

(a) is treated as received by an employee for the purposes of ITEPA 2003 by section 18 or 19 of that Act (receipt of money and non-money earnings), or

(b) would be so treated if it were not exempt income.

(7) In section 866 and this section—

• “employee” includes an office-holder and so “employment” includes an office, and

• “remuneration” means an amount which is or is treated as earnings for the purposes of ITEPA 2003.

868 Delayed payment of pension contributions

(1) This section applies if—

(a) a debit in respect of pension contributions is recognised by a company for accounting purposes, and

(b) the contributions are not paid until after the end of the period of account in which the debit is recognised.

(2) The contributions may be brought into account for the purposes of this Part only when they are paid.

(3) For the purposes of this section “pension contributions” means—

(a) sums paid by an employer by way of contributions under a registered pension scheme,

(b) sums paid to the trustees or managers of such a scheme that are treated as if they were the payment of contributions under the pension scheme (see section 199 of FA 2004), or

(c) expenses within section 246(3) of FA 2004 (expenditure on benefits under employer-financed retirement benefits schemes).

(4) Any adjustment required by this section of an accounting debit that is partly referable to an amount to which this section applies and partly to other matters must be made on a just and reasonable basis.

869 Bad debts etc

(1) No debit may be brought into account for the purposes of this Part in respect of a debt owed to the company, except—

(a) by way of impairment loss, or

(b) so far as the debt is released as part of a statutory insolvency arrangement.

(2) If a debt is so released, any gain in respect of the release that is brought into account for accounting purposes by the debtor is disregarded for the purposes of this Part.

(3) Any other gain in respect of an unpaid debt in respect of an intangible fixed asset that is brought into account by the debtor for accounting purposes is treated for the purposes of section 721 (receipts recognised as they accrue) as a gain in respect of an intangible fixed asset.

(4) Any adjustment required by this section of an accounting gain or loss that is partly referable to an amount affected by this section and partly to other matters must be made on a just and reasonable basis.

(5) In this section “debt” includes an obligation or liability that falls to be discharged otherwise than by the payment of money.