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HMRC internal manual

COTAX Manual

Repayments / reallocations: repayment interest: introduction

If tax has been paid for an AP ending after the 30 September 1993 and there is an overpayment of

  • Corporation tax
  • Income tax
  • Payments of tax credits
  • CIS25 deductions (only for a period before 05 April 2002), see Company Taxation Manual CTM92170
  • S458 CTA 2010 (formerly S419 (4) ICTA 1988) relief (only for APs ending on or after 01 October 1993) see CTM98245 / CTM98265

Which is to be repaid or reallocated, the overpayment potentially attracts repayment interest under S826 ICTA 1988. Repayment interest may be paid on repayments or reallocations

  • Regardless of the place of residence of the recipient company
  • On condition that the repayment relates to a period for which the company is within the charge to Corporation Tax

For APs ending after the 01/07/99 repayment interest is chargeable as ‘interest’ under the loan relationship rules S479 CTA 2009).

Note: Repayment interest does not apply to

  • Overpayments of late payment interest (LPI) or penalties
  • Repayments made by the CT Unit in Cumbernauld of payments made in error or incorrectly allocated
  • Repayments of any tax overpaid following assessments under s956 or s957 ITA 2007 (deductions of income tax), or repayments of withheld income tax following a CT61 set-off (s953(3b) ITA 2007).