Corporation Tax Act 2009 section 1286

VAT repayment supplements

Section 1286 exempts VAT repayment supplements from corporation tax, ensuring that companies are not taxed on supplementary payments received from HMRC when VAT repayments are delayed.

• When HMRC is late in repaying VAT to a company, it may pay a supplementary amount known as a VAT repayment supplement.
• This VAT repayment supplement is not subject to corporation tax.
• The exemption ensures that companies receive the full benefit of the supplement without a tax charge reducing its value.
• A corresponding income tax exemption exists for unincorporated businesses receiving VAT repayment supplements.

---