D1.1435 Corporate interest restriction (CIR)—carry forward amounts
Companies may experience variations in business profits and market interest rates. 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 disallowances in some periods and unused interest allowances in other periods.
To provide a greater element of fairness in the corporate interest restriction (CIR) rules, there are a number of carry-forward provisions that are set out in the table below:
|Tax attribute||Ownership||Carry-forward period||Statutory reference|
|Tax-interest disallowed||Company||Indefinite carry forward||TIOPA 2010, s 378|
|Unused interest allowance||Worldwide group||Five years||TIOPA 2010, ss 392-395|
|Excess debt cap||Worldwide group||Next period of account (PoA)||TIOPA 2010, s 400(3)–(7)|
As denoted 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. With effect for a change in ownership that takes place on or after 29 October 2018, there is an exception to this rule and no loss of unused interest allowance or excess debt cap will arise where a new holding company is inserted between an existing ultimate parent company and its shareholders1. This applies in the case of all attributes except tax-interest disallowance,