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HMRC internal manual

Company Taxation Manual

Particular bodies: local authorities: income tax deducted from payments received

Local authorities are entitled to repayment of any IT borne by deduction, for example on interest received. In practice, tax repayable should be set off against any tax deductible (see SAIM9035), leaving the authority to account for the balance.

Where there is an excess of tax deducted from income received by the authority over tax deducted by the authority from payments it has made, the balance of tax should be repaid to the authority.

The tax affairs of local authorities are usually dealt with by the Individuals and Public Bodies team in LC.

Repayment claims by local authorities should be made in writing.  There is no standard claim form and claims should therefore be made on headed letter paper.

Such claims should:

  • state the gross amount of income and the tax deducted,
  • state the amount of repayment claimed,
  • contain the words ‘to the best of my knowledge and belief the particulars given in this    claim are correct and complete’,
  • be signed by a senior official of the authority.

The frequency of claims is a matter for negotiation. However, no objection should be raised to claims at monthly intervals if significant sums are involved.