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HMRC internal manual

Company Taxation Manual

Corporation Tax self-assessment (CTSA): the payment obligation: late payment interest - tax deductible

Late payment interest, chargeable under TMA70/S87A, is an allowable expense in computing CT profits.  It falls to be taken into account for tax purposes as a non-trading debit under the loan relationship legislation (FA98/S33 and CTA2009/PART5).  The same is true of interest under:

  • TMA70/S87 on IT deductible from company payments under ITA07/Chapter 15
  • TMA70/S87A as extended by SI1998/3175 Regulation 7, on late and inadequate instalment payments (debit interest), see CTM92660.

The formulae for setting interest rates under Section 87A do not contain an adjustment for tax.  The formulae are at SI1989/1297 Regulations 3ZA and 3ZB inserted by SI1998/3176 Regulation 6.