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HMRC internal manual

COTAX Manual

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Claims / reliefs: other reliefs: S458 CTA 2010 - loan repaid on or after due date

When a loan is repaid, released or written off on or after the normal due date (Word 49KB) of the AP in which the loan is made, the company is not entitled to relief until the due date of the later AP in which the repayment, release or write-off takes place.

You may receive a completed form L2P, which is a form provided on the Government website for companies to claim relief. You must look at the information contained in the form to decide whether it should be treated as an amendment to the return, or a Sch1A claim.

Where a repayment, release or write-off takes place before the return is delivered, the company may make a S458 claim in the return itself, even though it is not due at that stage, and take the relief into account in arriving at its self assessment. See Example 4 (Word 67KB).

You need to be particularly careful to identify such cases from the information in the CT600A and to establish whether the company is entitled to the relief when the return is delivered. If the relief is not due when the return is delivered, you should put the case on B/F and give the relief as soon as possible after it becomes due. See COM53050 for more information.

It is more common for the repayment, release or write-off to occur after the return has been delivered. Where the company is in time to amend its return, the claim must be made by amending the return for the AP in which the loan was made. Otherwise, it is made outside the return, under the Schedule 1A TMA rules. See COM53140 Example 3.

In both cases, you have to make sure that the relief is not given prematurely.

It may occasionally happen that the due date of the later AP has already passed when the company delivers its return for the AP in which the loan is made. This could happen if the later AP is very short, or if the return is delivered very late. In such circumstances, the company can give effect to the relief in its original return for the AP in which the loan was made.

The self assessment charge shown in the return will then be net of the relief. As only the net S455 liability is captured and taken into account by COTAX in calculating interest, the computer may miscalculate the interest position as it cannot take into account the fact that all or part of the S458 relief is only effective from a date later than the due date of the AP. Caseworkers who review returns for S455 cases need to be alert to this possibility and intervene as necessary. See Example 6 (Word 81KB).

See COM53013 for legislation applying to this subject.