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HMRC internal manual

Debt Management and Banking Manual

Interest: Interest Review Unit (IRU): Corporation Tax (CT): Carry back

Carry-back of Advance Corporation Tax (ACT) and of losses applies to Corporation TaxAssessing (CTA) liability arising before 30 September 1993 and Corporation Tax Pay andFile (CTPF) liability from 01 October 1993 to 30 June 1999.

Carry-back of losses applies to COTAX liability from 1 July 1999 onwards.

Carry-back of ACT and losses in CTA and CTPF years now only happens where a long runninginvestigation is closed and carry-back had been held until the final amendments followingthe investigation.

For more detailed information about how the carry-back rules are applied and the implications for interest refer to the

  • COTAX Manual (COM)
  • Company Taxation Manual (CTM).

It may also be necessary to consult with the local office to agree the revised figuresbefore finalising the case.

Reasons for objections

Companies will generally object for one of the reasons below.

The rules have been applied incorrectly and interest should not be due

Confirm whether HMRC has acted correctly within the rules. If yes, uphold the interest. If no, apply the correct rules and recalculate interest, giving up the difference. If any repayment interest has been paid recalculate this and reclaim any difference by limiting the amount of interest being given up.

The carry back has displaced other tax relief, for example Marginal Small Company Relief, but the interest charge does not identify this

Confirm that this is the case and recalculate interest, taking account of the displacement, and give up the difference. If any repayment interest has been paid, recalculate this and reclaim any difference by limiting the amount of interest being given up.

HMRC has made an interim repayment until the carry-back is complete and the interest charge has been made ignoring this fact

If the interim repayment was made in expectation of the final agreement to thecarry-back recalculate the interest. Give up the interest which built up on the repaidamount from the appropriate date to the relevant date of the accounting periodsurrendering’ the carry-back (the date to which interest will have been charged) if thisis earlier.

The repayment should only carry repayment interest from the relevant date of thesurrendering’ accounting period to the date of repayment, if this is later. Whererepayment interest has been paid in excess of this amount, reclaim the difference bylimiting the amount of interest being given up.


  • Section 239 ICTA 1988 for ACT
  • Section 393A ICTA 1988 for Losses


  • COTAX Manual (COM) - Claims/Relief’s, ACT and Loss and Non-trading deficits carry-back
  • Company Taxation Manual (CTM)