CREC071500 - Expenditure credit redemption: Step 3
S1179CC CTA 2009听
The amount remaining听after Step听2 is used to discharge听any liability of the company to pay Corporation Tax (CT) for any accounting period听other than the current听period. The CT liability of the current period is discharged earlier, at Step 1 (CREC071200).听
Only CT liabilities听that are outstanding听(due but not settled) are discharged. A company cannot use听credit to discharge tax already paid and receive听a refund.听
The legislation does not prescribe a priority order, so the company may decide.听 In the absence of any offset specified by the company, HMRC may use its discretion to apply the offset.听
Example:听
Production Company A has 拢100,000 credit remaining听after Step 2. It has 拢30,000 unpaid CT for the previous听accounting period.听
The CT liability for the previous听accounting period is fully discharged and reduced to nil.听Production Company A has 拢70,000 credit remaining听to carry forward to Step 4.听