CTM92360 - Corporation Tax self-assessment (CTSA): the payment obligation: carry-back of trading losses or non-trading deficit - repayment interest
A claim to carry back a trading loss (CTA2010/S37) or a non-trading deficit on loan relationships (CTA2009/S459 (1)(b) may cause a repayment of CT or Income Tax for the earlier accounting period.
In such circumstances ICTA88/S826 (7A) and (7C) provide that repayment interest runs only from the normal due date for the accounting period in which the loss or deficit is incurred - see Example 1.
This does not, however, apply in the case of a trading loss that is carried back to an accounting period falling wholly within the twelve months preceding the period in which the loss is incurred - see Example 2.
Example 1
| Accounting period 01/04/2008 to 31/03/2009 | Accounting period 01/04/2009 to 31/03/2010 |
|---|---|
| CT liability (@ 28%) £50,000 paid on due date 01/01/2010 | Non-trading deficit £40,000 |
| (Profits include non-trading profits and gains on loan relationships of £100,000) | Claim under CTA2010/S459 (1)(b) to carry deficit back to accounting period ended 31/03/2009 |
As a result of the carry-back tax of £11,200 is repayable. A repayment for this is issued on 26/01/2011. The repayment carries repayment interest from 01/01/2011, the normal CT due date for the accounting period ended 31/03/2010.
Example 2
| Accounting period 01/04/2008 to 31/03/2009 | Accounting period 01/04/2009 to 31/03/2010 |
|---|---|
| Liability (@ 28%) £50,000 paid on due date 01/01/2010 | Trade loss £40,000. CTA2010/S37 claim to carry back to accounting period ended 31/03/2009 |
| £11,200 repaid on 26/01/2011 |
The repayment carries repayment interest from 01/01/2010, the normal CT due date for the earlier accounting period. This is because the relief is for a trading loss carried back to a period falling wholly within the twelve months preceding the accounting period of loss.