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HMRC internal manual

Company Taxation Manual

Corporation Tax self-assessment (CTSA): the payment obligation: carry-back of trading losses or non-trading deficit - late payment interest - summary of examples

Examples illustrating points in CTM92240 are as below.

Example 1 (CTM92251)

A company pays tax late and sustains an interest charge. This is not affected by a later carry-back of a trade loss.

Example 2 (CTM92252)

CT paid for an earlier accounting period is repaid, because of a loss carry-back claim, before the due date for the later accounting period.

If the loss carry-back claim were treated as not made (TMA70/S87A (6)) there would have been no repayment and no CT that would carry interest. Thus Section 87A (6) does not create an interest charge.

Example 3 (CTM92253)

When you give effect to a loss carry-back there is a wide range of reliefs that could be due instead if the loss carry-back claim is treated as not made under Section 87A (6).

You may need to take account of not only IT and CIS25/SC60 tax but also ACT, marginal small companies relief and double taxation relief.

Note: COTAX will not calculate late payment interest correctly in cases in which a carry-back displaces some other relief, see (b) of CTM92420.

Example 4 (CTM92254)

Another example of displacement. The company carries on both a trade and a letting business in respect of which it pays interest. The letting business is not producing income. The non-trade charges are allowable under ICTA88/S388. The non-trade charges are later displaced by a trade loss carry-back.

NOTE: Trade charges would not be disturbed by a loss relief carry-back because of ICTA88/S393A (8) (CTM04540).

Example 5 (CTM92255)

Extends Example 4 to illustrate what happens if the displaced non-trade charges are surrendered as group relief. This is an example of circumstances in which the law is not effective in deferring the interest effect of the carry-back.

Example 6 (CTM92256)

Example 6 shows that, once a carry-back claim has been made, it is possible that a later claim can affect the computation of the amount of (additional) CT that would have carried late payment interest if the carry-back claim had not been made.