F1PART 8CRestitution interest
CHAPTER 4Payment and collection of tax on restitution interest
357YODuty to deduct tax from payments of restitution interest
(1)
Subsection (2) applies if the Commissioners for Her Majesty's Revenue and Customs pay an amount of interest in relation to which Conditions 1 and 2 are met and—
(a)
the amount is (when the payment is made) restitution interest on which a company is chargeable to corporation tax under this Part, or
(b)
a company would be chargeable to corporation tax under this Part on the interest paid if it were (at that time) restitution interest.
(2)
The Commissioners must, on making the payment—
(a)
deduct from it a sum representing corporation tax on the amount at the restitution payments rate, and
(b)
give the company a written notice stating the amount of the gross payment and the amount deducted from it.
(3)
Condition 1 is that the Commissioners are liable to pay, or have agreed or determined to pay, the interest in respect of a company's claim for restitution with regard to—
(a)
the payment of an amount to the Commissioners under a mistake of law relating to a taxation matter, or
(b)
the unlawful collection by the Commissioners of an amount in respect of taxation.
(4)
Condition 2 is that the interest is not limited to simple interest at a statutory rate.
In determining whether or not this condition is met, all amounts which the Commissioners are liable to pay, or have agreed or determined to pay in respect of the claim are to be considered together.
(5)
For the purposes of Condition 1 it does not matter whether the Commissioners are liable to pay, or (as the case may be) have agreed or determined to pay, the interest—
(a)
pursuant to a judgment or order of a court,
(b)
as an interim payment in court proceedings,
(c)
under an agreement to settle a claim, or
(d)
in any other circumstances.
(6)
For the purposes of subsection (2) the restitution payments rate is to be applied to the gross payment, that is to the payment before deduction of a sum representing corporation tax in accordance with this section.
(7)
For the purposes of this section—
(a)
“interest” includes an amount equivalent to interest, and
(b)
an amount which the Commissioners pay as mentioned in subsection (1) is “equivalent to interest” so far as it is an amount determined by reference to the time value of money.