Corporation Tax Act 2010

Chapter 4 U.K. Surrender of tax refund within group

Modifications etc. (not altering text)

C1 Pt. 22 Ch. 4 applied (with modifications) by S.I. 1998/3175, reg. 9 (as substituted (with effect in accordance with reg. 1(2) of the amending S.I.) by The Corporation Tax (Instalment Payments) (Amendment) Regulations 2011 (S.I. 2011/1785), regs. 1(1), 12)

963 Power to surrender tax refund U.K.

(1) This section enables a company—

(a) which is a member of a group, and

(b) to which a tax refund is due for an accounting period,

to surrender the refund (or any part of it) to another company which is a member of the same group.

(2) The surrender may be made only if—

(a) the company making the surrender (“the surrendering company”) and the company to which the surrender is made (“the recipient company”) give notice to an officer of Revenue and Customs,

(b) the surrendering company and the recipient company are members of the same group throughout the period beginning with the start of the accounting period for which the tax refund is due and ending on the date on which the notice is given, and

(c) the recipient company also has that accounting period as an accounting period.

(3) A notice under subsection (2) must—

(a) be given before the refund is made to the surrendering company,

(b) be given jointly by the surrendering company and the recipient company,

(c) specify the amount to be surrendered, and

(d) be in such form as the Commissioners for Her Majesty's Revenue and Customs may require.

(4) For the purposes of this section “tax refund”, in relation to an accounting period of a company, means—

(a) a repayment of corporation tax paid by the company for the period, or

(b) a repayment of income tax in respect of a payment received by the company in the period.

(5) For the purposes of this section two companies are members of the same group if (and only if) they would be for the purposes of Part 5 (group relief).

964 Effects of surrender of tax refund U.K.

(1) This section makes provision about the effect of the surrender under section 963 of a tax refund due for an accounting period.

(2) So far as the company to which the surrender is made (“the recipient company”) is concerned, the effect of the surrender is that—

(a) the company is treated for all corporation tax purposes, except the one mentioned in subsection (3), as if it had paid an amount of corporation tax for the accounting period equal to the amount specified in the notice under section 963(2) (“the surrendered amount”), and

(b) the payment is treated for those purposes as if it had been made on the relevant date.

(3) For the purpose of working out the amount of any penalty to which the recipient company is liable under paragraph 18 of Schedule 18 to FA 1998 (failure to deliver return: tax-related penalty), the recipient company is treated as having paid the amount of corporation tax on the day on which the notice under section 963(2) is given (and not on the relevant date).

(4) So far as the company by which the surrender is made (“the surrendering company”) is concerned, the effect of the surrender is that—

(a) the company is treated for corporation tax purposes as if it had received a repayment of tax equal to the surrendered amount, and

(b) the repayment is treated for those purposes as if it had been received on the relevant date.

(5) If the tax refund surrendered is a repayment of corporation tax, any interest relating to it which has been paid by the surrendering company is treated as if it had been paid by the recipient company.

(6) For the purposes of this section “the relevant date”, in relation to a tax refund, means—

(a) so far as it consists of a repayment of corporation tax paid by the surrendering company after the date on which it became due and payable under section 59D or 59E of TMA 1970, the day on which it was paid by the surrendering company, and

(b) otherwise, the date on which corporation tax for the accounting period of the surrendering company became due and payable.

965 Interest on tax overpaid or underpaid U.K.

(1) This section applies if—

(a) a company has surrendered an amount under section 963, and

(b) there is, as a result of any of subsections (7A) to (7C) of section 826 of ICTA, a period for which the whole or any part of the surrendered amount would not have carried interest under that section if the refund had been made to the surrendering company (“the interest-free period”).

(2) The interest-free period is excluded from any period for which any refund made because of section 964(2) to the recipient company in respect of some or all of the surrendered amount or, as the case may be, that part of it is to carry interest under section 826 of ICTA.

(3) The interest-free period is excluded from any period for which a sum representing some or all of the surrendered amount or, as the case may be, that part of it would otherwise be treated (as a result of section 964) as not carrying interest under section 87A of TMA 1970.

(4) The following assumption is to be made in determining for the purposes of this section—

(a) which part of any amount is applied in discharging a liability of the recipient company to pay corporation tax, and

(b) which part is represented by a refund to the recipient company.

(5) The assumption is that the part in relation to which there is a period which would not have carried interest under section 826 of ICTA is applied in preference to any other part of that amount in or towards discharging the liability.

966 Payments for surrendered tax refunds U.K.

(1) This section applies if—

(a) companies give a notice under section 963(2) in pursuance of an agreement, and

(b) the company to which the surrender is made makes a payment under the agreement to the company by which the surrender is made that does not exceed the amount specified in the notice.

(2) The payment—

(a) is not to be taken into account in determining profits or losses of either company for corporation tax purposes, and

(b) is not to be regarded for the purposes of the Corporation Tax Acts as a distribution.