Corporation Tax Act 2010 section 965

Interest on tax overpaid or underpaid

Section 965 deals with how interest on overpaid and underpaid corporation tax is affected when a group company surrenders a tax refund to another group company.

• When a company surrenders a tax refund within a group, any period during which that refund would not have earned interest had it been paid directly to the surrendering company (the "interest-free period") is identified.
• The interest-free period is excluded when calculating interest on any refund subsequently made to the recipient company in respect of the surrendered amount.
• The interest-free period is also excluded when determining periods during which the recipient company's tax liability would be treated as not carrying late payment interest.
• Where part of the surrendered amount discharges the recipient's tax liability and part is refunded, it is assumed that the interest-free portion is applied first against the liability, before any other part of the amount.