What events trigger the withdrawal of unremittable amount relief under section 175 of the Corporation Tax Act 2009?

Relief is withdrawn when the amount ceases to be unremittable, is exchanged for a remittable amount, is used abroad, or is covered by an insurance payout. It is also withdrawn where an allowable impairment loss provision is made under the loan relationships rules or the bad debts provisions of the Act.

How does the clawback mechanism work under Corporation Tax Act 2009 section 175?

The clawback treats the relevant amount as a trading receipt in the accounting period when the triggering event occurs. However, the reversal is limited to amounts actually deducted under section 173 and cannot reverse relief that has already been clawed back through a previous triggering event, preventing double counting.

Is the clawback amount capped when an insurance recovery is received for an unremittable debt?

Yes. Where the triggering event is an insurance recovery, the amount brought back into account as a trading receipt is capped at the actual insurance payment received. If the insurance payout is less than the unremittable amount, only the recovery figure is reversed, not the full outstanding balance.

Can section 175 withdraw relief more than once for the same underlying unremittable amount?

No. If part of the relief has already been clawed back through a previous triggering event, it cannot be reversed again. This safeguard prevents double counting where multiple events might apply to the same underlying amount, ensuring only the remaining unreversed relief is subject to further withdrawal.

Corporation Tax Act 2009 section 175

Withdrawal of relief

Section 175 sets out the circumstances in which relief previously claimed for unremittable amounts must be clawed back, and the mechanism by which this withdrawal operates.

If an amount previously deducted as unremittable ceases to be unremittable, is exchanged for a remittable amount, is used abroad, or is covered by an insurance payout, the relief must be reversed
Relief is also withdrawn if an allowable impairment loss provision is made against the amount, whether under the loan relationships rules or the bad debts provisions
The clawback works by treating the relevant amount as a trading receipt in the accounting period when the triggering event occurs, but only to the extent relief was originally given and has not already been reversed
Where the triggering event is an insurance recovery, the amount brought back into account is capped at the actual insurance payment received

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