COM153022 - CT Pay and File: claims / reliefs: ACT: ACT carry-back and late payment interest: Examples
Example 1
| Accounting Period (AP) 01/01/21 to 31/12/21 | AP 01/01/22 to 31/12/22 |
| Agreed and assessed CT liability of £20,000 | Surplus ACT of £5,000 |
| Paid £15,000 on the due date, 01/10/22 (£5,000 unpaid) | Claims under Section 239(3) (S239(3)) Income and Corporation Taxes Act (ICTA) 1988 to carry it back against CT profits of the previous Accounting Period (AP) |
Liability for the AP 01/01/9421 to 31/12/9421 reduced to £15,000
Interest on £5,000 (the amount unpaid before the ACT set-off claim was made) is due for the period 01/10/22 to 01/10/23, which is the due date of the later AP
Example 2
Accounting Period (AP) 01/01/21 to 31/12/21 | AP 01/01/22 to 31/12/22 |
| Agreed and assessed CT liability of £20,000 | Surplus ACT of £5,000 |
| Paid £20,000 on the due date 01/10/22 | Claims under Section 293(3) (S239(3)) Income and Corporation Taxes Act (ICTA) 1988 to carry it back against CT on profits of the previous AP |
Liability for APE 31/12/21 reduced to £15,000.
£5,000 tax is repaid on 01/07/23,
No interest is due because £20,000, the amount of CT liability disregarding the ACT carry back claim, was paid.
If the company had paid the £20,000 late S87A interest would have been payable from the due date until the date of payment. Further interest to 01/10/23 would not be due on the £5,000 covered by the ACT carry-back. S87A is only concerned with tax unpaid at the time of the carry-back.
Example 3
In this example the interest calculation is performed after allowing for reliefs that have been displaced by the carry-back
| Accounting Period (AP) 01/01/21 to 31/12/21 | AP 01/01/22 to 31/12/22 |
| Agreed and assessed liability of CT £20,000 less IT suffered £20,000 net nil | Surplus ACT £5,000 |
| No CT is paid | Claims under Section 239(3) (S239(3)) Income and Corporation Taxes Act (ICTA) 1988 carry it back against CT on profits of the previous AP |
The liability remains Nil, being CT £20,000 less ACT £5,000 less IT suffered £15,000, and £5,000 IT is available for repayment.
Disregarding the ACT carry back claim, there would have been no CT liability, because an Income Tax set-off removed it. There is, therefore, no S87A interest liability.