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CTA09/S3 - company generally excluded from liability to Income Tax and CTA10/S967  and S968 - set off of Income Tax suffered

A company may suffer Income Tax by deduction on annual interest, royalties and other annual payments it receives. Such payments are treated as income of the recipient, and the gross amount forms part of the total profits on which the company is chargeable to Corporation Tax. The income is not within the charge to Income Tax, CTA09/S3, and so the company is entitled to repayment of the balance remaining of any IT suffered after it has been set-off under CTA10/S967 (1) - (3) against any tax assessable on a UK resident company.

However, the tax deducted from income received by a company may under ITA07/S952 be set against the tax deductible under ITA07/S848 from payments of annual interest, etc, made by the company.  ITA07/PART15 contains the collection and accounting provisions for Income Tax on Company Payments (form CT61).

Non-UK resident companies, including those within the Non-resident Landlord Scheme, which have suffered Income Tax by deduction may similarly set off the tax against any Corporation Tax liability, CTA10/S968.

The set-off is against Corporation Tax assessable on the income for the accounting period in which the payment from which Income Tax has been deducted is brought into account in computing the income chargeable to Corporation Tax. Any unused balance that features in the Company Tax Return will be repaid.