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HMRC internal manual

Corporate Finance Manual

Debt cap: statement of allocation: late submission of revised statement: examples

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

Examples of late submission

Example 1

Company A is a UK subsidiary of a worldwide group. When declaring its interest income for the accounting period ended 31 December 2012 it omits interest received from an overseas bank account of £1.6 million. The enquiry is not concluded until 1 April 2015 and the return amended on 15 April; there is no appeal. The authorised company of the group decides to send in a revised statement because it has £1.2 million disallowances for the 2012 accounting period for which it has not been able to compensate by a disregard of financing income. Company A already has net financing income, and the conclusion of the enquiry increases this by £1.6 million.

Because the amount of the disallowance now being allocated against financing income, at £1.2 million, is less than the change in the chargeable profit of Company A, a revised statement can be made (see CFM91720). The revised statement has to be submitted within 30 days of the 15 April 2015 (see CFM91730 circumstance 1).

Example 2

The facts are as in example 1, except the group has previously submitted a statement of allocated exemptions that disregarded financing income amounts equal to the full amount of the disallowance for the period. On conclusion of the enquiry into Company A, the group submits a revised statement of allocated exemptions, which reallocates £1.6 million exemptions from Company B to Company A. This allows Company B to use part of a non-trading loan relationship deficit brought forward.

‘Condition B’ is met for Company A - the £1.6 million change does not exceed its £1.6 million addition to chargeable profits. But it is not met for Company B, which has experienced no changes in its chargeable profits as a result of the enquiry into Company A. The revised statement therefore does not meet the criteria of regulation 28 of SI 2009/3173, and cannot be accepted.