SolvedCOM153010 | CT Pay and File: claims / reliefs: ACT: COTAX treatment of ACT carry-back
From HM Revenue & Customs · COTAX Manual
COTAX treats a carry-back of Advance Corporation Tax (ACT) as if it was a payment made on an Effective Date of Payment (EDP (see Glossary)). It does not treat it as a reduction in the charge.
It calculates the EDP and computes interest taking account of the rules in:
Section 87A(4) (S87A(4)) Taxes Management Act (TMA) 1970. See COM153020 for more information
S826(7) Income and Corporation Taxes Act (ICTA) 1988. See COM153030 for more information
Please note that: COTAX cannot take account of the special rules that apply when surplus ACT generated by the carry-back of a trading loss or a non-trading deficit, is itself carried back in:
If you look at the payment record in function VPPD (View Payment And Posting Details), you see more than one posting resulting from an assessment that includes a carry-back of ACT. There is:
a gross CT charge, exclusive of carry-backs (posting type ‘ASM’ for a main assessment or ‘ASA’ for an amendment)
one or more payment type postings (posting type ‘ACT’) expressed as amounts of tax paid
Postings following an ACT carry-back
See Example (see COM153014).
Repayments resulting from carry-backs
COTAX makes repayments and reallocations by reference to the latest payment type posting(s) on the Accounting Period (AP) record, including any carry-back postings and calculates repayment interest accordingly.
It sets the Clerical Interest Indicator CII (see COM95015) automatically after making a repayment or a reallocation out of a carry-back posting. It does this because it would not be able to calculate the interest position correctly if another repayment arose for the same AP. See COM153070 for more information.
See: