HMRC have published final guidance regarding the new corporate interest restriction (CIR), including confirmation of how returns, elections and other documents are to be filed. This will be of immediate relevance to groups for whom 31 March 2018 is the deadline to appoint a CIR ‘reporting company’ and to make certain CIR elections.
Noteworthy changes to the guidance include:
- Updating for changes expected to be enacted in Finance Act 2018;
- Guidance regarding exceptional cases where an ultimate parent refuses to provide its financial statements to UK group companies;
- Confirmation that HMRC do not intend to use their power to appoint a reporting company ‘on a speculative basis or where there is no indication the group might be subject to an interest restriction’;
- Guidance regarding how other UK group companies might authorise the appointment of a reporting company;
- Fixing a glitch in the previous guidance that had led some groups to incorrectly ignore companies with ‘negative tax-EBITDA’;
- Practical guidance regarding what a group needs to do in order to carry forward excess debt cap;
- Confirmation that the transitional exception from the regime anti-avoidance rule for commercial restructuring arrangements entered into in connection with the commencement of the CIR rules may apply to arrangements ‘entered into at a date considerably after commencement’;
- Confirmation of various detailed points regarding the application of certain CIR elections that may be beneficial in joint venture scenarios (or other cases where one group holds a non-consolidated interest in another group); and
- Confirmation of various points in relation to the special regime for public infrastructure, including confirmation of HMRC’s view that a company that has made a public infrastructure election but subsequently fails one or more of the other Qualifying Infrastructure Company (QIC) conditions will cease to be within the public infrastructure regime for that period (but noting that if the QIC conditions are deliberately failed in order to achieve a tax advantage, HMRC would seek to apply the regime anti-avoidance rule).
Appointing a Reporting Company
HMRC have published a revised guidance note confirming the process for groups to notify HMRC of the group’s CIR ‘reporting company’ online via the government gateway. Please see our previous article for a discussion of pros and cons of appointing a reporting company.
Filing CIR elections that must be made outside a return
HMRC have confirmed that (save where the group has a customer compliance manager) any CIR elections that must be made outside a CT or CIR return should be submitted by post to to Wealthy Mid-sized Business, HM Revenue and Customs, BX9 1BN. There is no facility available to submit these elections online. Please see our previous article for further details about CIR elections that may need to be made before 31 March 2018.
For further information please contact: