CREC071700 - Expenditure credit redemption: Step 5
S1179CC CTA 2009
Any amount remaining after Step 4 is used to discharge any other liability of the company to pay a sum to HMRC. This includes both:
liabilities reported elsewhere on the CT600 tax return, such as section 455 tax on loans to company participators
liabilities outside Corporation Tax – for example, an outstanding VAT charge or liabilities under any contract settlement
Only liabilities that are outstanding are discharged. A company cannot use credit to discharge tax already paid and receive a refund.
Example:
Production Company A has £100,000 credit remaining after Step 4. It also has an unpaid VAT liability of £15,000.
At Step 5, the VAT liability is fully discharged and reduced to nil. Production Company A has £85,000 credit remaining to carry forward to Step 6.