DMBM405670 - Interest: Interest Review Unit (IRU): Corporation Tax (CT): CTSA Negative credit interest

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There may be cases where an amount of credit interest has been given and then repaid as an overpayment because all other amounts are paid. This is usually where the Quarterly Payment (QP) indicator is not set. When the QP signal is finally set and the credit interest properly worked out, a negative credit interest amount will be outstanding. This is 'clawing back' money paid to the company in error because the original credit interest is now shown to have been 'excessive'. A debit interest charge may also be made.

Where the tax had been paid in full or overpaid before the credit interest was given, the IT system will not charge late payment interest on any amount of negative credit interest reclaimed from the company.

However some or all of the credit interest may have originally been used towards paying the tax bill, making it appear that the company do not need to pay the balance of tax. When the negative credit interest is reclaimed at a later date, this will show that the amount of tax has not been paid after all. The IT system will charge late payment interest when the negative credit interest is paid because this will be taken as a 'late' payment of tax. The negative credit interest is effectively a means of claiming the underpaid tax.