COM153070 - CT Pay and File: claims/reliefs: ACT: clerical interest indicator
This subject is presented as follows
Automatic setting of the Clerical Interest Indicator
Manual setting of the Clerical Interest Indicator
Effect of setting the Clerical Interest Indicator
Form CT250(P)
Automatic setting of the Clerical Interest Indicator
COTAX makes repayments and reallocations by reference to the latest payment type posting(s) on the Accounting Period (AP) record including any carry-back postings, and calculates repayment interest accordingly.
COTAX sets the Clerical Interest Indicator (CII (see COM95015)) automatically against an AP after:
- a repayment or reallocation is made by reference to a carry-back posting
- you reduce or withdraw a recorded carry-back to that AP
It does this because it can not calculate the interest position correctly if another repayment arises for the same AP.
Manual setting of the Clerical Interest Indicator
You should set the Clerical Interest Indicator (CII) against an Accounting Period (AP) when you:
- recognise that the (Effective Date of Payment) EDP calculated by COTAX will produce the wrong result for interest purposes
- cannot put it right by amending the EDP (see Glossary) calculated by COTAX
This is the case when you include a carry-back to that AP (other than of trade losses from an AP ending no more than 12 months after the end of the AP) in an assessment or amendment and:
- it displaces some other relief(s) or set-off(s) that would otherwise fall to be given (such as DTR, Income Tax, Marginal Relief or SC60 tax) and also reduces the CT liability
- you include in an assessment or amendment, a carry-back to that AP of surplus ACT which is partly, but not wholly, caused by the carry-back of a trading loss from a still later AP
It is not possible to correct the interest position by amending the EDP if the carry-back posting cannot be given a single correct EDP.
Example 1 (see COM153074)and Example 2 (see COM153075) illustrate such cases.
You must recognise these cases and set the Clerical Interest Indicator (CII) yourself. COTAX cannot recognise the interest implications, so does not set the CII automatically.
Effect of setting the Clerical Interest Indicator
When the Clerical Interest Indicator (CII) is set against an Accounting Period (AP), it prevents automatic:
- interest calculations
- issue of demand notes
- issue of repayments
It does not prevent COTAX calculating repayment interest and adding it to any repayment you make using function DIRR (Direct Repayment).
Form CT250(P)
When COTAX sets the Clerical Interwest Indicator (CII) automatically, the case does not appear immediately on the Clerical Interest Indicator work list (CIIW) in the Accounts Office. If you make a further amendment to the assessment for the Accounting Period (AP), the case then appears on the work list. You do not therefore need to send any information to the Accounts Office regarding interest when you make or amend an assessment to give effect to a first claim for a carry-back to an AP.
However, when you set the CII manually the case always appears immediately on CIIW in the Accounts Office.
When a case appears on the CIIW work list, staff in HMRC Payments have to calculate interest manually. When you make a carry back ACT posting, they need information from you. You should therefore send a memo to HMRC Payments whenever you carry back ACT and:
- you have set manually the CII
- COTAX has set the CII automatically and you are making a further amendment to the assessment. Send the form even if no alteration to the interest position is required
Please note that: HMRC Payments can not make any repayment that is due to the company. Once the interest has been corrected you must use function DIRR (Direct Repayment) to make the repayment.
See: