Commentary

D1.1482 Debt cap provisions—calculation of disallowance

Corporate tax
Corporate tax | Commentary

D1.1482 Debt cap provisions—calculation of disallowance

Corporate tax | Commentary

D1.1482 Debt cap provisions—calculation of disallowance

The debt cap provisions were repealed from 1 April 2017 and replaced by the corporate interest restriction regime (CIR). The CIR places a limit on the amount of interest expenses and certain other financing costs that large businesses can deduct when calculating the profits subject to corporation tax. See D1.1401–D1.1470.

Where the debt cap provisions apply (ie where the gateway test has been failed) there is a disallowance if the tested expense amount (D1.313) exceeds the available amount (D1.313A). The amount by which the tested expense amount exceeds the available amount is the 'total disallowed amount'1. If the available amount exceeds (or is equal to) the tested expense amount, no disallowance arises.

Authorised company

The relevant group companies may appoint one of their number as authorised company, to act as the reporting body for a relevant period of account. Such an appointment must be signed on behalf of each relevant group company (except relevant group companies that are dormant companies throughout the relevant period of account2) and a formal application must be made to HMRC3. When making such an application4:

  1.  

    (a)     the company seeking to be appointed as authorised company must apply in writing to HMRC at least three months before the statement of allocated disallowances has to be received by HMRC. (This statement has to be received by HMRC within 12 months of the end of the relevant period of account),

  2.  

    (b)     the application must be sent to the tax office dealing with the

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