Tax relief on company pension contributions - date paid

diveleader

Short summary first, so please bear with me:

I sold the goodwill in my Ltd company resulting in a hefty corporation tax bill

Skip forward to the next year and my intention was to get some of this tax back by posting a loss and getting my accountant to make a claim
This was done by making max employer contributions into 2 pensions (80k total)

Due to cashflow etc, these payments were sent out 7 days before the accounting year end (and this is shown via Sage accounts)
Due to post and the pensions providers processing speed these payments left the company bank account approx 4 weeks later, ie in the next company tax year.

My accountant states that he cannot use these 2 pension payments to increase the loss for the company tax year as 'tax relief can only be given on contributions that have actually been paid' (PTM043100) and the paid date is when it leaves the bank account not when the cheque is written and the Sage transaction posted.

As we are talking about 16k here, I thought I would ask the question here prior to seeking advice from a tax accountant.

martinsurrey

when you say paid out, did you write a cheque?

diveleader

Hi Martin


Yes, the payments were sent with two chequers with covering letters.

MDMD

For corporation tax purposes the pension contribute are deductible in the period in which they are paid (i.e. Cash went out of the bank not just accrued in the accounts).

If they went out in the later period you won't get the loss in the earlier one and will not be able to carry the loss back to the period before that as it is a 12 month claim unless the trade has permanently ceased.

martinsurrey

http://www.hmrc.gov.uk/manuals/rpsmmanual/RPSM05300080.htm

The other side (the pension providers) should have treated the contribution as received when they received the cheque.

Ring them and ask, and get confirmation from them.

You should be able to match their date without much fuss from HMRC (but check with HMRC after yuo know the dates)

diveleader

Many thanks for the posts - esp Martin. I think the link sums it up (rather negatively to me)