CT600H: cross-border royalties, box by box

CT600H is the cross-border royalties supplementary page of the Company Tax Return. It lists royalties a company paid overseas where it reasonably believed the recipient was entitled to treaty relief, so that tax was not deducted or was deducted at a reduced rate. This guide explains when the page is needed, how to complete it in Tax Optimiser, and what every box and column from H1 to H5H means.

When a company needs a CT600H

File a CT600H, and tick box 130 on the CT600, if the company is a UK company, or the UK permanent establishment of a foreign company, that:

• made cross-border royalty payments in the return period; and
• reasonably believed that the recipient of the royalties would be entitled to treaty relief.

A company that deducted tax at the full rate from every royalty it paid overseas, or paid no royalties overseas, does not file the page.

What the page reports

The page is a table with one row for each recipient. For each one it gives the recipient’s name and address, the type of royalty, the gross amount paid, the agreement under which relief was claimed, the rate of tax deducted and the amount of tax deducted. Nothing from the page is carried into the tax calculation: it is a report to HMRC of payments made.

Completing the CT600H in Tax Optimiser

Open the period’s Corp Tax Calculations workspace and choose Cross-border Royalties in the Sections menu. If the period of account is longer than 12 months it is filed as two returns, each with its own CT600H; use the Return 1 and Return 2 buttons to switch between them, and enter each payment in the return for the period in which it was made.

Step 1 — Add a payment for each recipient

Click Add payment and enter the recipient’s name, at least two lines of their address, and the type of royalty paid (for example a patent or trade mark royalty).

Step 2 — Enter the amount, the agreement and the rate

Enter the gross amount of royalty paid in whole pounds. Choose the agreement under which relief was claimed: a Double Taxation Agreement, with the name of the country, or the Interest and Royalties Directive. Then enter the rate of tax deducted as a percentage. Enter 0 if the royalty was paid without deducting tax.

The tax deducted is worked out for you: the gross amount multiplied by the rate, to the nearest penny.

Step 3 — Save and check the return

Click Save. As soon as there is a payment, Tax Optimiser:

• ticks box 130 and box 645 (has made cross-border royalty payments) on the CT600;
• files the CT600H with the return, with one row for each payment;
• adds a Cross-border royalties page to the computation listing the payments;
• lists the completed form under Supplementary pages on the CT600 Document card, where you can view or download it.

The printed form has nine rows. If you enter more, they are all filed, and the PDF adds a continuation sheet.

A worked example

A company pays a royalty of £33,333 to a recipient in Canada and deducts tax at a treaty rate of 7.75%. Column D is 33,333, column E is the Double Taxation Agreement with Canada, column F is 7.75, and column G is 33,333 × 7.75% = £2,583.31.

CT600H box by box

Boxes H1 to H4 — Company information

The company name, tax reference and the period covered by the page. Tax Optimiser copies them from the return; the period cannot exceed 12 months.

Box H5 column A — Name of recipient of the royalty

The name of the person or company the royalty was paid to. Between 2 and 56 characters.

Box H5 column B — Full address of recipient of the royalty

The recipient’s address. At least two lines are needed, of up to 28 characters each, with an optional fourth line of up to 18 characters.

Box H5 column C — Type of royalty payment made

A short description of what the royalty was for.

Box H5 column D — Gross amount of royalty paid

The royalty before any tax was deducted, in whole pounds.

Box H5 column E — Agreement under which relief claimed

Either (a) the Interest and Royalties Directive or (b) the name of the country with a Double Taxation Agreement with the UK.

Box H5 column F — Rate of tax deducted from payment

The percentage of tax deducted, from 0 to 100, to two decimal places.

Box H5 column G — Amount of tax deducted from payment

Column D multiplied by column F, to the nearest penny. Worked out for you.

Box H5 column H — Additional notes

Optional. Up to 56 characters.

What Tax Optimiser checks, and what it does not do

Before filing, Tax Optimiser checks that every payment has a name, two address lines, a type, an amount above nil and an agreement, that the rate is between 0 and 100, and that the text fits the lengths and characters HMRC accepts. Accented letters and symbols such as £, $, # and ~ are not accepted, so use the plain spelling. A return cannot be sent until these are fixed.

It does not decide whether the recipient is entitled to treaty relief or what rate applies, and it does not account for or pay over the tax deducted. Those are separate obligations of the company.

Common questions

Where to go next

• Corporation Tax in Tax Optimiser — the full journey from trial balance to filed return.
• CT600 box-by-box guide — the supplementary page boxes on the main return.
• HMRC’s CT600H guidance — the official notes for the page.