Interest on tax overpaid by companies

Produced by Tolley in association with

Corporation Tax

Guidance

A harmonised regime is in place in respect of interest accrued on late payments of tax and on the refund of overpayments of tax. The rules applicable to late and underpaid tax are set out in the Interest on tax underpaid by companies guidance note.

It was originally intended that the harmonised interest regime would apply across all taxes; however, to date, corporation tax remains outside its scope. Nonetheless, the current formula for determining the rates applicable to overpaid corporation tax and the rate for those taxes and duties within the harmonised interest regime is the same (see below).

The current and historic rates of interest applied by HMRC to refunds of corporation tax are provided on the GOV.UK website.

See Simon’s Taxes A4.629 for a list of taxes and duties covered by the interest rules and their respective commencement dates.

When is interest payable by HMRC?

The most common scenario in which interest is paid to a company by HMRC is where the corporation tax liability of a company

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Anton Lane

Managing Partner, Edge Tax LLP , Corporate Tax, OMB, Employment Tax, International Tax, Personal Tax, IHT Trusts and Estates

I started my career helping to sort out tax problems for high net worth individuals, corporations and high profile clients under investigation for suspected serious fraud at Ernst & Young. I specialised in anti avoidance legislation targeting offshore structures and held senior positions with large offshore fiduciary service providers. I established the Edge brand over a decade ago and in 2012 focused the main business on managing tax risks, handling suspected serious fraud cases and assisting clients and advisers with disclosures to HMRC.

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