Section 357YP — Corporation Tax Act 2010: Treatment of amounts deducted under section 357YO

Treatment of amounts deducted under section 357YO 357YP 1 An amount deducted from an interest payment in accordance with section 357YO(2) a is treated for all purposes as paid by the company mentioned in section 357YO(1) on account of the company's liability, or potential liability, to corporation tax charged on the interest payment, as restitution interest, under this Part , and b is accordingly to be treated for corporation tax purposes as going towards the discharging of the company’s liability to pay, for the accounting period concerned, tax charged under this Part (as calculated under paragraph 2 of the fifth step of paragraph 8(1) of Schedule 18 to FA 1998).

2 Subsections (3) and (4) apply if—

a the Commissioners for Her Majesty’s Revenue and Customs have, on paying an amount which is not (when the payment is made) restitution interest, made a deduction under section 357YO(2) from the gross payment (see section 357YO(6)),

and b a company becomes liable to repay the net amount to the Commissioners, or it otherwise becomes clear that the gross amount cannot, or will not, become restitution interest.

3 If the condition in subsection (2)(b) is met in circumstances where the company is not liable to repay the net amount to the Commissioners, the Commissioners must—

a repay to the company the amount treated under subsection (1) as paid by the company, and b make any other necessary adjustments; and any time limits applying to the making of adjustments are to be ignored.

4 If the condition in subsection (2)(b) is met by virtue of a company becoming liable to repay to the Commissioners the amount paid as mentioned in subsection (2)(a)—

a this Part has effect as if the company were liable to repay the gross payment to the Commissioners, and b the amount deducted by the Commissioners as mentioned in subsection (2)(a) is to be treated for the purposes of this Part as money repaid by the company in partial satisfaction of its liability to repay the gross amount.

5 Subsections (3) and (4) have effect with the appropriate modifications if the condition in subsection (2)(b) is met in relation to part but not the whole of the gross amount mentioned in subsection (2)(a).

6 In this section “ the net amount ”, in relation to a payment made under deduction of tax in accordance with section 357YO(2), means the amount paid after deduction of tax.