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In which year should corporation tax relief be given for additional PAYE liabilities?
I am dealing with two old enquiry cases relating to PAYE liabilities and am on the point of agreeing a contract settlement for both. However in one the HMRC inspector has calculated the corporation tax relief on the amounts that should have been paid against the years in which the liabilities arose. In effect he is allowing a late claim for relief and deducting that from the PAYE interest and penalties that would arise. By way of contrast the inspector dealing with the other case is saying that the additional amounts now due will be deductible in calculating the profits for the year in which a settlement is reached.
Can readers advise on which of these approaches is correct or are they both right in their own way? It occurs to me that if a loss already arises in the year of settlement...
