INTM333570 - Double Taxation Applications and Claims: repayment interest: How repayment interest is calculated where the non-UK resident company鈥檚 accounting period exceeds 12 months

Period over 12 months

Where a company prepares accounts for a period that exceeds 12 months, its accounting period ends (for UK corporation tax purposes) 12 months from the beginning of the accounting period. This means that where a company resident in an EU/EEA member state prepares accounts for a period exceeding 12 months there will be two (or more) accounting periods to consider when calculating repayment interest.

If a company prepared accounts for the period 1 July 2020 to 31 December 2021 its accounting periods for the purposes of calculating repayment interest are

  • 1 July 2020 to 30 June 2021 and
  • 1 July 2021 to 31 December 2021.

贰虫补尘辫濒别听

Form DT-Italy/Company is received on 1 February 2021 from a company in Italy to reclaim the UK income tax (less 8%) that was deducted from royalties paid to them by a UK company on 30 April 2019 and 30 October 2019. Repayment was made on 31 March 2021. 皇冠体育app Italian company received the royalties in their accounting period 1 July 2018 to 31 December 2019.

You will have to make two separate repayment interest calculations

Calculation 1 - for the accounting period 1 July 2018 to 30 June 2019

As the accounting period is 1 July 2018 to 31 December 2019 (a period that is over 12 months), the first accounting period end date is 30 June 2019, 12 months from the beginning of the accounting period. In this accounting period the Italian company received one royalty payment on 30 April 2019. Repayment interest is due from 1 July 2019 (the day following the end of the accounting period in which the royalty payment was received) to 31 March 2021 (when HMRC repaid the income tax) on the repayment relating to this royalty payment

Calculation 2 - for the accounting period 1 July 2019 to 31 December 2019

皇冠体育app royalty payment made on 30 October 2019 was received in the accounting period 1 July 2019 to 31 December 2019. Repayment interest is due from 1 January 2020 (the day following the end of the accounting period in which the royalty payment was received) to 31 March 2021 (when HMRC repaid the income tax) on the repayment relating to this royalty payment.