The new 45% corporation tax rate on restitution interest paid by HMRC

Paul Farmer

Jivaan Bennett

The Summer Finance Bill 2015 includes a new measure subjecting restitution interest to a charge to corporation tax at a rate of 45%. Paul Farmer and Jivaan Bennett (Joseph Hage Aaronson) explain the background and key elements of the proposed legislation.

What does Finance Bill 2015 propose?

The Finance Bill 2015 inserts new Part 8C (s 357YA et seq) into the Corporation Tax Act 2010 subjecting restitution interest paid to companies by HMRC to a corporation tax charge at 45%.

Why is this legislation being introduced?

The draft provisions are directedt High Court claims for restitution of overpaid tax a significant component of which is often interest. In its landmark judgment in Sempra Metals Ltd v IRC [2007] STC 1559 the House of Lords held that Sempra was entitled to an award of compound interest on amounts of advance corporation tax (ACT) paid from the date of payment to the...

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What does Finance Bill 2015 propose?

The Finance Bill 2015 inserts new Part 8C (s 357YA et seq) into the Corporation Tax Act 2010 subjecting restitution interest paid to companies by HMRC to a corporation tax charge at 45%.