Commentary

D1.1484 Debt cap provisions—available amount

Corporate tax
Corporate tax | Commentary

D1.1484 Debt cap provisions—available amount

Corporate tax | Commentary

D1.1484 Debt cap provisions—available amount

The debt cap provisions were repealed from 1 April 2017 and replaced by the corporate interest restriction regime (CIR).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.

The available amount (AA) for a period of account is the sum of certain interest expenses disclosed in the financial statements of the group, on the assumption that any securitisation companies are not members of the worldwide group1. The relevant interest expenses are those contained in the group's gross consolidated expenses (both UK and non-UK) in respect of interest payable on borrowing, amortisation of discounts/premiums relating to borrowing and expenses ancillary to borrowing2, financing expenses implicit in finance lease payments, financing expenses relating to debt factoring, and other amounts specified by regulations, but disregarding preference share dividends where the shares are recognised as a liability in the group's financial statements for the period.

Separate provisions apply to investment entities that, owing to changes in accounting standards, do not consolidate one or more group companies3. An investment entity is, in essence, one that holds investments for investors and where the performance of its investments is measured on a fair value basis. In such circumstances, UK group companies may include a financing expense in the calculation of the tested expense amount or tested income amount that is not

To continue reading
View the latest version of this document, as well as thousands of others like it, sign in to TolleyLibrary or register for a free trial