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HMRC internal manual

COTAX Manual

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HM Revenue & Customs
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Claims / reliefs: loss and non-trading deficits carry-back: clerical interest indicator

This subject is presented as follows.

Automatic setting of the clerical interest indicator (CII)
Manual setting of the clerical interest indicator
Effect of setting the clerical interest indicator
Form CT250(P)

Automatic setting of the clerical interest indicator (CII)

COTAX sets the CII (Word 32KB) automatically against an AP after you make a repayment or reallocation because of a carry-back posting or reduce or withdraw a recorded carry-back to that AP.

It does this because it would not be able to calculate the interest position correctly if another repayment arose for the same AP.

This does not apply if the carry-back posting was a trading loss to an AP falling wholly within the previous 12 months as COTAX can handle the processing in these types of cases if the rate of tax has not changed.

Manual setting of the clerical interest indicator

You should set the clerical interest indicator against an AP when you recognise that the COTAX calculated EDP (Word 41KB) of a carry back will produce the wrong result for interest purposes and you cannot put it right by amending the COTAX calculated EDP.

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 one or more other reliefs or set-offs that would otherwise fall to be given, such as DTR, Income Tax, or marginal relief.

It is not possible to correct the interest position by amending the EDP if you cannot give the carry-back posting a single correct EDP. See COM50040 Example 2 and COM50080 Example 2.

You must recognise when that is so and set the clerical interest indicator (CII) yourself as COTAX cannot recognise the interest implications and does not set CII automatically.

Effect of setting the clerical interest indicator

When the clerical interest indicator is set against an AP, it prevents:

  • automatic interest calculations
  • automatic issue of payment applications
  • automatic issue of repayments.

Setting the CII 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 CII automatically, the case does not appear immediately on the Clerical Interest Indicator (CIIW) work list in the CT Unit Cumbernauld. If you make a further amendment to the assessment for the AP, the case does appear on the work list. Therefore, you do not need to send any information to the CT Unit Cumbernauld 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 the CIIW work list in the CT Unit Cumbernauld.

When a case appears on the CIIW work list, staff in the CT Unit Cumbernauld have to calculate interest manually. Where a relief has been displaced, they need information from you. You should therefore complete a form CT250(P), which is an eform available on SEES, and use the appropriate [Send] button to send it to the CT Unit Cumbernauld whenever you displace a relief that was previously available and have set the CII, or 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. If the [Send] button doesn’t work, email the form (This content has been withheld because of exemptions in the Freedom of Information Act 2000) .

The CT Unit Cumbernauld cannot 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:

  • COM50091 for a list of forms relevant to this subject
  • COM50092 for a list of functions to use in particular situations.