Part 4: Income tax, corporation tax and capital gains tax Section 38: Restitution interest payments Background note
Under the law as it stood before this section, payments of restitution paid by HMRC to companies which relate to interest are subject to corporation tax at the standard rate. However the interest payments targeted by this section will be subject to a higher rate, to reflect the particular circumstances of the awards. These include the number of years over which the overpayments were made, the fact that any such awards would be calculated on a compound basis and the historic corporation tax rates that applied during the years to which these claims relate.