SolvedCOM122070 | Repayments/reallocations: non automatic reallocations: surrender outside S963 CTA 2010
From HM Revenue & Customs · COTAX Manual
Section 963 (S963) Corporation Tax Act (CTA) 2010 provides that, under specific circumstances, groups of companies can give notice that a repayment due to one group member is to be treated as tax paid by another group member. There is an interest advantage to the group from this arrangement.
A company may occasionally ask you to set off a repayment due to it against a liability of another company when S963 does not apply. There is no statutory basis for such a set off, whether or not the companies concerned are members of the same group.
After checking that there are no arrears of tax or interest outside COTAX for the donating company, you may wish to agree to such an arrangement as a matter of customer service or mutual convenience. If you do so it is important to make sure that neither company gains an interest benefit to which they are not entitled as a result of the arrangement.
You must insist that any request for a set off is in writing and that an authorised person signs it on behalf of the surrendering company. You must acknowledge the request in writing in case of any later dispute regarding the making of the repayment.
Interest
Do not apply the interest concessions contained in S963 but deal with any interest consequence using the normal rules in S87A Taxes Management Act (TMA) 1970 and S826 Income and Corporation Taxes Act (ICTA) 1988.
charge the recipient company late payment interest on any unpaid tax liability satisfied by the set off from the normal due date until the date that you make the set off
allow the surrendering company repayment interest from the later of the normal due date for the Accounting Period (AP) and the date of payment of the tax, until the date on which you make the set off
Because there are two different companies involved the common period rule does not apply.
(This content has been withheld because of exemptions in the Freedom of Information Act 2000)
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