CH82292 - Penalties for Inaccuracies: Calculating the penalty: Potential Lost Revenue Corporate Interest Restriction: Reactivations

This guidance applies to returns which are relevant returns for a corporate interest restriction (CIR) period beginning on or after 1 April 2023.  

For relevant returns for periods before this date, HMRC staff should seek advice from the specialist technical team, see CH910000. 

Where a company is a member of a CIR group, and that company has received an enquiry into a company tax return, the group may be required to submit a revised interest restriction return (IRR) (see CFM98535). 

As a result, it is possible that the total disallowed amount for the group could decrease, or that the total reactivated amount could increase. 

When calculating the potential lost revenue (PLR) for individual group companies, there is a limit on how far increased CIR reactivations (or reduced disallowances - see CH82291) are taken into account.  

Where a company in a CIR group increases its CIR reactivations following a revised IRR, the permitted reduction to PLR is no more than the relevant proportion of the increase in the reactivation.  

To work out the “relevant proportion”, identify by what proportion the worldwide group’s reactivation cap has increased as a result of the revised IRR compared with the original IRR. For example, if the worldwide group’s reactivation cap has increased by 10%, the relevant proportion of the company’s increased reactivation is 10%. 

See CH82294 for an example.