Are penalties and/or interest allowed as deductions for corporation tax purposes?

From Section 1303 of CTA2009:

1. In calculating profits for any corporation tax purpose, no deduction is allowed for any penalty or interest mentioned in the first column of the following table.

2. The table:

Penalty or interest Description of tax, levy or duty
Penalty under any of sections 60 to 70 of VATA 1994 Value added tax
Interest under section 74 of VATA 1994
Penalty under any of sections 8 to 11 of FA 1994 Excise duties
Penalty under any of paragraphs 12 to 19 of Schedule 7 to FA 1994 Insurance premium tax
Interest under paragraph 21 of that Schedule
Penalty under any provision of Part 5 of Schedule 5 to FA 1996 Landfill tax
Interest under paragraph 26 or 27 of that Schedule
Penalty under any provision of Schedule 6 to FA 2000 Climate change levy
Interest under any of paragraphs 70, 81 to 85 and 109 of that Schedule
Penalty under any provision of Part 2 of FA 2001 Aggregates levy
Interest under any of paragraphs 5 to 9 of Schedule 5 to, paragraph 6 of Schedule 8 to and paragraph 5 of Schedule 10 to FA 2001
Penalty under section 25 or 26 of FA 2003 Customs, export and import duties
Penalty under any provision of Part 4 of FA 2003 Stamp duty land tax
Interest under any provision of that Part
Interest required to be paid by regulations made under section 71 of FA 2004 (construction industry) Income tax

3. In calculating profits for any corporation tax purpose, no deduction is allowed for any surcharge under section 59 of VATA 1994.

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1 Response to “Are penalties and/or interest allowed as deductions for corporation tax purposes?”


  1. 1 allan October 28, 2012 at 1:35 am

    Correct. So many of my clients would love to deduct their tax penalties and interest. Thanks for the explanation!


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