Oil Taxation Act 1975 Schedule 2 paragraph 17

Interest on tax

Paragraph 17 limits the amount of repayment interest that HMRC must pay when a petroleum revenue tax (PRT) repayment arises because an allowable loss from a later chargeable period is carried back to reduce the assessable profit of an earlier period.

• When an allowable loss arising in a later chargeable period (ending after 30 June 1991) is carried back to reduce an earlier period's assessable profit and this triggers a tax repayment, the portion of that repayment attributable to the loss carry-back is called "the appropriate repayment."
• The interest payable on the appropriate repayment is capped at the difference between the "relevant percentage" of the carried-back loss and the amount of the appropriate repayment itself, ensuring HMRC does not pay more interest than the net benefit of the relief.
• The relevant percentage is 85% for repayment periods ending on or before 30 June 1993, and 60% for repayment periods ending after that date, reflecting the PRT rates applicable at those times.
• If a repayment of advance petroleum revenue tax (APRT) is also due for the same repayment period as a consequence of the loss carry-back, the APRT repayment is added to the appropriate repayment when calculating the interest cap, so both repayments are considered together.