Where corporation tax is not paid by the due date (see A4.607), interest is charged on the amount unpaid from the due date to the date of payment, whether or not the due date is a business day1. See A4.620 regarding the removal of the need for an Appointed Day Order to activate interest rates for TMA 1970, s 87A.
In general, interest is calculated from the due date by reference to the liability for the accounting period as finally determined, irrespective of intermediate changes as a result of an amended return or an HMRC amendment following an enquiry2. There are exceptions to this rule where relief is carried back for losses or non-trading deficits on loan relationships (see below).
Interest paid by a company on unpaid corporation tax is allowable (under the loan relationship rules) as a deduction in computing profits or losses3.
XY Ltd has an accounting period ending on 31 December 2014, and the due date for payment of its corporation tax liability is 1 October 2015. It initially estimates its corporation tax liability as £50,000 and pays this amount on 29 September 2015. On 18 December 2015 it delivers a return and self-assessment showing tax payable of £52,000 and makes a further payment of £2,000.
An HMRC officer opens an enquiry into the return, and on its completion on 1 July 2016, notifies the company of his conclusion that