Taxes Management Act 1970

[F1 87A Interest on overdue corporation tax etc. U.K.

(1) Corporation tax shall carry interest at the [F2 rate applicable under section 178 of the Finance Act 1989] from the date when the tax becomes due and payable (in accordance with [F3 section 59D of this Act]) until payment.

(2) Subsection (1) above applies even if the date when the tax becomes due and payable (as mentioned in that subsection) is a non-business day within the meaning of section 92 of the M1 Bills of Exchange Act 1882.

(3) In relation to corporation tax assessed by virtue of section [F4 346(2) or 347(1) of the principal Act, [F5 137(4), 139(7) or 179(11) of the 1992 Act or section 96(8) of the Finance Act 1990]] (which enable unpaid corporation tax assessed on a company to be assessed on other persons in certain circumstances), the reference in subsection (1) above to the date when the tax becomes due and payable is a reference to the date when it became due and payable by the company.

(4) [F6 Subject to [F7 subsections (4B) and (7)] below] in any case where—

(a) there is in any accounting period of a company (in this subsection referred to as “the later period”) an amount of surplus advance corporation tax, as defined in subsection (3) of section [F8 239 of the principal Act], and

(b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is treated for the purposes of the said section [F8 239] as discharging liability for an amount of corporation tax for an earlier accounting period (in this subsection referred to as “the earlier period”), and

(c) disregarding the effect of the said subsection (3), an amount of corporation tax for the earlier period would carry interest in accordance with this section,

then, in determining the amount of interest payable under this section on corporation tax unpaid for the earlier period, no account shall be taken of any reduction in the amount of that tax which results from the said subsection (3) except so far as concerns interest for any time after the date on which any corporation tax for the later period became due and payable (as mentioned in subsection (1) above).

F9 [(4A) In a case where—

(a) there is for an accounting period of a company (“the later period”) [F10 a non-trading deficit on the company’s loan relationships,]

(b) as a result of a claim under [F11 section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act the whole or part of the deficit for the later period is set off against profits] of an earlier accounting period (“the earlier period”), and

[F12 (c) if the claim had not been made, there would be an amount or, as the case may be, an additional amount of corporation tax for the earlier period which would carry interest in accordance with this section,]

[F13 then, for the purposes of the determination at any time of whether any interest is payable under this section or of the amount of interest so payable, the amount mentioned in paragraph (c) above shall be taken to be an amount of unpaid corporation tax for the earlier period except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable as mentioned in subsection (1) above.]]

[F14 (4B) Where, in a case falling within subsection (4A)(a) and (b) above—

(a) there is in the earlier period, as a result of the claim under [F15 section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act], an amount of surplus advance corporation tax, as defined in section 239(3) of the principal Act, and

(b) pursuant to a claim under the said section 239(3), the whole or any part of that amount is to be treated for the purposes of section 239 of the principal Act as discharging liability for an amount of corporation tax for an accounting period before the earlier period,

the claim under the said section 239(3) shall be disregarded for the purposes of subsection (4A) above but subsection (4) above shall have effect in relation to that claim as if the reference in the words after paragraph (c) to the later period within the meaning of subsection (4) above were a reference to the period which, in relation to the claim under [F15 section 83(2)(c) of the Finance Act 1996 or paragraph 4(3) of Schedule 11 to that Act], would be the later period for the purposes of subsection (4A) above.]

(5) A sum assessed on a company by such an assessment as is referred to in [F16 section 252(5) of the principal Act] (recovery of payment of tax credit or interest on such a payment) shall carry interest at the [F17 rate applicable under section 178 of the Finance Act 1989] from the date when the payment of tax credit or interest was made until the sum assessed is paid.

F18 [(6) In any case where—

(a) on a claim under section 393A(1) of the principal Act, the whole or any part of a loss incurred in an accounting period (“the later period”) has been set off for the purposes of corporation tax against profits of a preceding accounting period (“the earlier period”);

(b) the earlier period does not fall wholly within the period of twelve months immediately preceding the later period; and

(c) if the claim had not been made, there would be an amount or, as the case may be, an additional amount of corporation tax for the earlier period which would carry interest in accordance with this section,

then, for the purposes of the determination at any time of whether any interest is payable under this section or of the amount of interest so payable, the amount mentioned in paragraph (c) above shall be taken to be an amount of unpaid corporation tax for the earlier period except so far as concerns interest for any time after the date on which any corporation tax for the later period became (or, as the case may be, would have become) due and payable as mentioned in subsection (1) above.

(7) Where, in a case falling within subsection (6)(a) and (b) above—

(a) there is in the earlier period, as a result of the claim under section 393A(1) of the principal Act, an amount of surplus advance corporation tax, as defined in subsection (3) of section 239 of that Act; and

(b) pursuant to a claim under the said subsection (3), the whole or any part of that amount is to be treated for the purposes of the said section 239 as discharging liability for an amount of corporation tax for an accounting period before the earlier period,

the claim under the said subsection (3) shall be disregarded for the purposes of subsection (6) above but subsection (4) above shall have effect in relation to that claim as if the reference in the words after paragraph (c) to the later period within the meaning of subsection (4) above were a reference to the period which, in relation to the claim under the said section 393A(1), would be the later period for the purposes of subsection (6) above.]]

Textual Amendments

F1 S. 87A inserted by Finance (No. 2) Act 1987 (c. 51), ss. 85, 95(2)

F2 Finance Act 1989, s. 179(1)(b) and S.I. 1989/1298. Previously “prescribed rate”. And see S.I. 1989/1297 for regulations made, and interest rate set, under Finance Act 1989, s. 178

F3 Words in s. 87A(1) substituted (with effect in accordance with s. 199(2)(3) of the amending Act) by Finance Act 1994 (c. 9), Sch. 19 para. 24; S.I. 1998/3173, art. 2

F4 Income and Corporation Taxes Act 1988 (c. 1), s. 844, Sch. 29 para. 10(4)(b). Previously “266(2), section 267(3C), section 277(1) or section 278(5) of the Taxes Act”.

F5 Words in s. 87A(3) substituted (6.3.1992 with effect as mentioned in s. 289(1)(2) of the substituting Act) by Taxation of Chargeable Gains Act 1992 (c. 12), ss. 289, 290, Sch. 10 para. 2(9) (with ss. 60, 101(1), 171, 201(3))

F6 Words in s. 87A(4) inserted (27.7.1993) by 1993 c. 34, s. 120, Sch. 14 para. 4(1)

F7 Words in s. 87A(4) substituted (23.3.1995) by Finance Act 1995 (c. 4), Sch. 24 paras. 7, 9(1); S.I. 1994/3224, art. 2

F8 Income and Corporation Taxes Act 1988 (c. 1), s. 844, Sch. 29 para. 10(4)(c)(d). Previously “85 of the Finance Act 1972” and “85”respectively.

F9 S. 87A(4A) inserted (27.7.1993) by 1993 c. 34, s. 170, Sch. 18 para.1

F10 Words in s. 87A(4A)(a) substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 1(1)(a) (with Sch. 15)

F11 Words in s. 87A(4A)(b) substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 1(1)(b) (with Sch. 15)

F12 S. 87A(4A)(c) substituted (23.3.1995) by Finance Act 1995 (c. 4), Sch. 24 paras. 7, 8(a); S.I. 1994/3224, art. 2

F13 Words in s. 87A(4A) substituted (23.3.1995) by Finance Act 1995 (c. 4), Sch. 24 paras. 7, 8(b); S.I. 1994/3224, art. 2

F14 S. 87A(4B) inserted (23.3.1995) by Finance Act 1995 (c. 4), Sch. 24 paras. 7, 9(2); S.I. 1994/3224, art. 2

F15 Words in s. 87A(4B) substituted (with effect in accordance with s. 105(1) of the amending Act) by Finance Act 1996 (c. 8), Sch. 14 para. 1(2) (with Sch. 15)

F16 Income and Corporation Taxes Act 1988 (c. 1), s. 844, Sch. 29 para. 10(4)(d). Previously “subsection (2) of section 102 of the Finance Act 1972”

F17 Finance Act 1989, s. 179(1)(b), S.I. 1989/1298. Previously “prescribed rate”. And see S.I. 1989/1297 for regulations made and interest rate set under Finance Act 1989, s. 178

F18 S. 87A(6)(7) substituted (27.7.1993) for s. 87A(6) by 1993 c. 34, s. 120, Sch. 14 para. 4(2)

Modifications etc. (not altering text)

C1 S. 87A modified by Income and Corporation Taxes Act 1988 (c. 1), s. 438A, Sch. 19AB para. 3 (as inserted (25. 7. 1991) by Finance Act 1991 (c. 31), s. 49, Sch. 8)

C2 S. 87A extended (with modifications) by Income and Corporation Taxes Act 1988 (c. 1), s. 438A, Sch. 19AB para. 5(6) (as inserted (25.7.1991) by Finance Act 1991 (c. 31), s. 49, Sch. 8)

S. 87A applied (with modifications) (2.10.1992) by S.I. 1992/2326, reg. 6(5)(6)

C3 S. 87A modified by Income and Corporation Taxes Act 1988 (c. 1), s. 767B(1)(b) (as inserted (with effect in accordance with s. 135(6) of the amending Act) by Finance Act 1994 (c. 9), s. 135(1)(6))

C4 S. 87A modified (3.5.1994) by Finance Act 1994 (c. 9), s. 250(4)(5)

Marginal Citations

M1 1882 c. 61.