Corp Tax Refund

[SimonMac]

OH Hector you little tulip, you will try and make my life a PITA!

Seems HMRC have deemed it necessary that I get a (very) small refund from CT, normally its a cheque that I ignore, however this year they have refunded the money back into my bank account, how would I treat this in terms of my books? Its not a sale as I don't want to pay VAT on it, the only refund option is for VAT not CT, would it be deemed as interest the same as if I got it back from the bank, but again I assume I would then have to pay CT on this amount?

As the refund is £3.78 its a lot of hassle which is why I normally throw the cheque away!

[northernladuk]

What did your accountant say?

[SimonMac]

What did your accountant say?

Why did I know it would be you!

The finance department said "throw the cheque in the bin" but Hector have outwitted them

[Louisa@InTouch]

Yes this would be classed as interest income into your company.

And therefore taxable - so you will pay corporation tax on this!

HMRC have to get something from the interest they pay you

[SimonMac]

Yes this would be classed as interest income into your company.

And therefore taxable - so you will pay corporation tax on this!

HMRC have to get something from the interest they pay you

Fankoo

[pr1]

you don't want to pay VAT on £3.78?

[SimonMac]

you don't want to pay VAT on £3.78?

Not if I don't have too

[pr1]

Yes this would be classed as interest income into your company.

And therefore taxable - so you will pay corporation tax on this!

HMRC have to get something from the interest they pay you

So you need to pay tax on overpaid tax? is that right?!

Say profit is £100
CT due is £80
CT paid is £85
refund received is £5
then you have to pay CT on the £5, so money back in company pocket is £4

so you lose out on 20% if you overpay?

(add three zeros to each number if you want to make it more exciting)

[Darren at Fox-Bartfield]

CT Interest

So you need to pay tax on overpaid tax? is that right?!

Say profit is £100
CT due is £80
CT paid is £85
refund received is £5
then you have to pay CT on the £5, so money back in company pocket is £4

so you lose out on 20% if you overpay?

(add three zeros to each number if you want to make it more exciting)

If it's interest received from HMRC yes as classed as income however if it is a refund of the CT paid (i.e. overpaid the tax) then no.

[pr1]

If it's interest received from HMRC yes as classed as income however if it is a refund of the CT paid (i.e. overpaid the tax) then no.

Ah, ok that makes sense - I assumed in OP's case it was overpayment due to the word "refund", but on reading it again I guess it could be either