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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 - 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.