Commentary

D1.1424 Corporate interest restriction—adjustments to reflect differences between treatment of items in company's accounts and in consolidated accounts of the group

Corporate tax
Corporate tax | Commentary

D1.1424 Corporate interest restriction—adjustments to reflect differences between treatment of items in company's accounts and in consolidated accounts of the group

Corporate tax | Commentary

D1.1424 Corporate interest restriction—adjustments to reflect differences between treatment of items in company's accounts and in consolidated accounts of the group

TIOPA 2010, s 495 permits HMRC to make regulations altering the calculation for the purposes of Chapter 7 (group interest and group-EBITDA) where the financial statements of a worldwide group for a period include or omit an amount in respect of any matter and any member of the group deals with that matter for tax or accounting purposes in a different way. Regulations have been introduced under this provision to cover the following1:

  1.  

    •     where on 1 April 2017 a company was party to a loan relationship which is dealt with in the company's accounts using an amortised cost basis of accounting and in the financial statements of its worldwide group the loan relationship is recognised using a fair value basis of accounting. The Regulations also apply where the loan relationship is the hedged item under a designated fair value hedge and thus is revalued in the company's accounts for movements in the risk that is being hedged. In such cases, for the purposes of calculating the net group-interest expense, the adjusted net group-interest expense, the qualifying net group-interest expense and the group-EBITDA, it is assumed that the loan relationship is accounted for in the financial statements of the worldwide group using an amortised cost basis of accounting2

  2.  

    •     where at 1 April 2017 there was a loan relationship between two group members, which was previously recognised in the

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