Yeah, if it is interest, it is interest income. If it is a refund of overpaid tax, it isn't interest income. It isn't even income, really. It's a negative amount in your tax expense column, isn't it?
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If its just a refund of an overpayment, then in your books your corporation tax account would show the overpayment as a debit balance, e.g.:
Corporation Tax calculated and accounted for:
DR P&L £10000
CR Corporation Tax £10000
The overpayment:
DR Corporation Tax £10500
CR Bank £10500
Corporation Tax account: -£500
Refund received:
DR Bank Account £500
CR Corporation Tax £500
CT Account Balance: £nil
(I think I've got my credits and debits the right way around there).
So in other words it doesn't have any effect on your tax position, its just a refund to your bank account and a bookkeeping adjustment. Unless the refund also includes interest, in which case it might be something like:
Refund + interest received:
DR Bank Account £550
CR Corporation Tax £500 (balance now £nil)
CR Interest Income £50
The £50 would be included in your taxable income.Comment
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The £3.78 is held on account until used to offset CT owed this year, but once you do that they'll credit another 2p as interest on the interest. Quite tough if you're OCD about getting things to add up. Now I need an extra tab in the worksheet just for "Bank of Hector" with CR and DR and all that.
I dunno why you binned the cheques. Just pay them into the company account and put it down as interest, as if the account itself paid that interest.
Will HMRC still send a cheque if requested? I presumed there was a tick-box on the CT600 that my accountant didn't check this time round but perhaps it's just the way now.Comment
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