CTM92253 - Corporation Tax self-assessment (CTSA): the payment obligation: carry-back of trading losses or non-trading deficit - late payment interest - example 3

Accounting period 01/01/2008 to 31/12/2008	Accounting period 01/01/2010 to 31/12/2010
CT profit	£40,000	Trade loss £20,000
CT liability	£10,000	CTA2010/S37 claim, as extended by FA09/Sch 6, to carry back to accounting period ended 31/12/2008. (No profits for the accounting period ended 31/12/2009.)
DTR	£ 8,000
CT payable paid by due date	£ 2,000

Calculation
Liability after carry-back becomes profit	£40,000
Less loss carry-back	£20,000
Profit chargeable to tax	£20,000
Tax @ 25%	£ 5,000
DTR	£ 5,000
Tax payable	Nil

The £2,000 CT paid is repayable.

The carry-back has no consequences for late payment interest. Although the DTR has been displaced by a carry back of losses with a later effective date of payment, no additional amount of CT would have carried interest if the claim had not been made. However, COTAX will incorrectly charge interest in such a case. See COM50090 for the action to take.