In the world of corporate taxation, businesses in the UK are required to submit a CT600 tax return each year to HMRC (Her Majesty’s Revenue and Customs). The CT600 form is essential for determining a company’s corporation tax liability, and businesses must complete it accurately to avoid penalties or issues with HMRC.
However, there are circumstances where the status of a company’s tax submission might be marked as “Not Currently Being Pursued”. This term can cause confusion, as many business owners may not fully understand what it entails or the implications it may have for their tax obligations.
In this article, we will explore what the “Not Currently Being Pursued” status means for a CT600 tax return, its implications for businesses, and what actions, if any, companies should take when they encounter this status.
What is the CT600 Tax Return?
The CT600 is a statutory requirement for all UK-based companies. Whether your business is a limited company, a corporation, or an unincorporated association, you must submit this return annually. The form outlines various details about the company’s financial activities, including:
- Profits and losses
- Taxable income and deductions
- Capital allowances
- R&D (Research and Development) tax credits
- Expenses that are eligible for corporation tax relief
The information from the CT600 allows HMRC to calculate how much corporation tax a company owes or whether it qualifies for any tax reliefs or refunds. Companies are required to file their CT600 tax returns within 12 months of the end of their accounting period, and any corporation tax owed should be paid within 9 months and 1 day after the period ends.
Failing to submit the CT600 in time or inaccurately filling out the form can result in penalties from HMRC.
What Does “Not Currently Being Pursued” Mean?
When HMRC uses the term “Not Currently Being Pursued”, it refers to a situation where they have chosen not to actively pursue a particular tax debt or issue related to the company’s tax obligations at that time. It does not mean that the debt or issue has been resolved, waived, or cancelled. Instead, it indicates that HMRC is, for now, not actively chasing payment or resolution.
The status can be applied to corporation tax, VAT, PAYE, or other tax-related matters. In the context of a CT600, this status might come up if there is a pending tax liability or an issue with the company’s submitted return.
Reasons for the “Not Currently Being Pursued” Status
There are several reasons why HMRC may classify a company’s tax situation as “Not Currently Being Pursued”:
- Administrative Delays
Sometimes, HMRC may experience internal delays in processing tax returns or following up on a company’s payment. In such cases, they might mark the company’s tax status as “Not Currently Being Pursued” while they wait for internal processes to catch up. - Company Insolvency or Dormancy
If a company becomes insolvent or is declared dormant, HMRC may temporarily suspend the pursuit of tax liabilities. Insolvent companies may be involved in liquidation proceedings, and HMRC will wait until the process is complete before chasing unpaid taxes. - Disputes or Appeals
A company may have challenged or appealed an HMRC tax decision. While the appeal is under consideration, HMRC might choose not to pursue any potential tax liability until a final decision is made. - Low Priority or Small Debt
If the amount owed is small or if the company’s tax situation is deemed low priority, HMRC may temporarily suspend pursuit. This usually applies to small businesses where the cost of pursuing the debt outweighs the benefits. - Payment Plan Arrangements
If a company has entered into a Time to Pay Arrangement (TTP) with HMRC, they may mark the tax issue as “Not Currently Being Pursued” while payments are being made according to the agreed schedule.
Implications of “Not Currently Being Pursued”
The “Not Currently Being Pursued” status might seem reassuring at first glance, but it can have serious implications if left unchecked. Below are some key points for companies to consider:
- The Debt Still Exists
Although HMRC is not actively chasing the debt, it still exists. The “Not Currently Being Pursued” status does not mean the company is off the hook or that the liability has been removed. The company will need to address the underlying issue at some point. - Accrual of Interest and Penalties
Even though HMRC is not pursuing the tax liability at present, interest and penalties on unpaid taxes may continue to accrue. The longer the issue remains unresolved, the larger the final bill could become. - Impact on Credit Rating
Unpaid tax liabilities, even if marked as “Not Currently Being Pursued,” can have an impact on a company’s credit rating and financial standing. Credit agencies may take note of unresolved tax matters, potentially affecting the company’s ability to secure loans or other financial agreements. - Re-engagement by HMRC
At any point, HMRC can decide to reinitiate pursuit of the tax liability. The “Not Currently Being Pursued” status is not permanent, and businesses should be prepared for HMRC to resume collection efforts. - Potential for Legal Action
If a company does not address its tax issues in a timely manner, HMRC may eventually take legal action to recover the debt, including issuing a winding-up petition for insolvency.
What to Do If Your Company is Not Currently Being Pursued
If your business is marked as “Not Currently Being Pursued,” there are several proactive steps you can take to resolve the issue and avoid potential future problems:
- Contact HMRC for Clarification
It’s important to understand why HMRC has assigned this status to your company’s tax return. Reaching out to HMRC for clarification can help you understand the underlying issue and take the necessary steps to resolve it. - Review Your Financial Records
Ensure that your company’s financial records are up to date and that you have correctly calculated your corporation tax. An internal review or working with an accountant can help you identify any errors or omissions in your CT600 submission. - Pay Any Outstanding Liabilities
If the issue is related to an unpaid tax liability, consider paying it as soon as possible to avoid accruing additional interest or penalties. If your company cannot afford to pay the full amount, you may be able to negotiate a Time to Pay Arrangement with HMRC. - Appeal or Dispute Resolution
If you believe that the tax liability or issue is incorrect, you can file an appeal or work with HMRC’s dispute resolution services to resolve the matter. Be sure to keep all relevant documents and communication for your records. - Seek Professional Advice
Tax matters can be complicated, and working with a professional tax advisor can help you navigate the situation. An experienced advisor can help you communicate with HMRC and develop a plan to address any outstanding issues.
Conclusion
The “Not Currently Being Pursued” status on a CT600 tax return may offer temporary relief from HMRC’s collection efforts, but it does not eliminate the company’s tax liability. Business owners should remain proactive in addressing any unresolved tax issues to avoid future penalties, interest charges, or legal action. Understanding the underlying reasons for this status and taking the appropriate steps to resolve the situation will help ensure your company remains compliant with HMRC’s regulations and avoid unnecessary financial strain.