Having a wobble about my knowledge on this one. I have always been with the understanding that penalties and interest are not allowable... but then I read this...
"Any late payment interest you pay to HMRC is tax deductible for Corporation Tax purposes. This means you can include this expense in your company accounts for the accounting period (or periods) when the interest was incurred."
Did I miss something? Was I taught wrong? Did the the rules change?? Are penalties still dis-allowable?
(to add...As far as I was aware, interest earned on early CT was adjusted as loan relationships but not taxable, and penalties and interest paid were disallowed)
I am glad I review these sorts of things regularly!!
-- Edited by FoxAccountancyServices on Monday 30th of September 2013 07:51:28 PM
Interest has always been allowable but penalties not (as like any penalties eg speeding ticket you are breaking the law and you dont get tax relief for doing this)
Interest on late CT like interest on a loan or HP is just a service cost which are always allowed.
Thanks for the info. I wasn't always involved in the tax return work, in my old job, so maybe I misunderstood. I always assumed that the interest was like the fine.. a penalty for breaking the law! But I see how it could be interpreted as a loan of that money from HMRC. :)
Can I just check I've plugged my figures into Sage Tax correctly...
I've got add back of CT interest marked as loan relationships, and then a deduction further down the comp as "Non trading deficit - CTA 2009 s459(1)(a)"
Just checked, and this is indeed the correct treatment... in case anyone was wondering 
