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HMRC internal manual

COTAX Manual

HM Revenue & Customs
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Claims / reliefs: loss and non-trading deficits carry-back: non-trading deficit c/b & late payment interest

A non-trading deficit carried back to an earlier AP has late payment interest consequences for the receiving AP and therefore needs special treatment in COTAX.

Under s389(1), s459(1) and s463(2) CTA 2009, a company may claim to carry-back a deficit against non-trading credits of the preceding 12 months.

S87A(4A) TMA 1970 recognises that any CT remaining unpaid for the earlier AP for which the set-off takes place is being reduced by a relief that originates later. It ensures that late payment interest continues to run until the due date for the later AP.

Section 87A(4A) achieves this by:

  • identifying the notional unpaid CT liability that would have been due if the deficit carry-back claim had not been made
  • charging Section 87A interest on the unpaid notional liability so computed, up to the earliest due date of the AP from which the loss was carried back.

See COM50031 for legislation applying to this subject.