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HMRC internal manual

Corporate Finance Manual

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HM Revenue & Customs
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Debt cap: failure to make statements of allocation: default allocation of disallowance for company with multiple financing expense amounts: example

Company T and the default disallowance

In the example in CFM91820 Company T has a default reduction of £393,023. Its net financing deduction of £1,300,000 is made up of the following financing expense amounts (it has no financing income amounts):

  • Debt factoring costs £97,658
  • Non-trade loan relationship debits £213,267 (excluding exchange losses and any other debits excluded by TIOPA10/PT7/S313(3))
  • Trade loan relationship debits £85,984
  • Finance lease financing costs £903,091

If Company T does not make an election specifying any other allocation then the default allocation will be as in the table below:

Non trade loan relationship debits £213,267
   
Trade loan relationship debits £85,984
Finance lease financing costs £93,772
Debt factoring costs £nil
Total £393,023