Part 22 Miscellaneous provisions

Chapter 4 Surrender of tax refund within group

965 Interest on tax overpaid or underpaid
(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.