Corporate interest restriction ― carry-forward amounts

By Tolley

The following Corporation Tax guidance note by Tolley provides comprehensive and up to date tax information covering:

  • Corporate interest restriction ― carry-forward amounts
  • What can be carried forward under the CIR rules?
  • Tax-interest expense disallowance carried forward
  • Unused interest allowance
  • Excess debt cap

What can be carried forward under the CIR rules Companies may experience variations in business profits and market interestrates Changes in capital structure that impact the level of debt on the balance sheet may also occur from time to time These and other sources of volatility could result in interestdisallowances in some periods and unused interestallowances in other periods To provide a greater element of fairness in the corporate interestrestriction CIR rules there are a number of carry forward provisions Tax attribute Ownership Carry forward period Statutory reference Tax interestdisallowed Company Indefinite carry forward TIOPA 2010 s 378 Unused interestallowance Worldwide group Five years TIOPA 2010 ss 392 395A Excess debt cap Worldwide group Next period of account PoA TIOPA 2010 ss 400 3 7 400A As detailed in the table above the tax attributes can belong to either the group as a whole or to an individual company This distinction in ownership of these attributes is important Where the tax attribute belongs to the worldwide group then any change to the ultimate parent will result in the loss of those tax attributes at that point other than where for reorganisations which take place on or after 29 October 2018 a new holding company is inserted between an existing ultimate parent company and its shareholders Where the group retains the same ultimate parent following a transaction other changes to the composition of the group are ignored ie the worldwide group is treated as the same group This applies in the case of all attributes except tax interestdisallowance which belongs to the individual company to which the disallowance was allocated Where a company moves to a different worldwide group it will preserve its tax interestdisallowance for indefinite use and it can be reactivated whilst it is a member of that other group or any subsequent group Although the excess debt cap can only be carried forward to the

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