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HMRC internal manual

Corporate Finance Manual

Debt cap: failure to make statements of allocation: information not provided to group companies

What happens if the information is not provided by the ultimate UK parent

If the information detailed in CFM91890 above is not provided by the ultimate UK parent before the filing date of the company’s return, regulations 17 and 31 of the Financing Costs and Income Regulations provide that HMRC must determine for the worldwide group for the relevant period of account the amounts of:

  • the total disallowed amount, and
  • for reductions in financing expenses, the tested expense amount, or
  • for reductions in financing income, the total unrestricted reductions and tested income amount as appropriate.

A notice of determination must be sent to the company required to make the financing expense or financing income reduction and to the ultimate UK parent stating the date on which the determination is issued.

Any determination made by HMRC has to be made within three years of the filing date of the company’s tax return. Regulations 17 and 31 provide that HMRC must make the determination to the best of their information and belief - in other words, it should be based as far as possible on information given in the accounts and returns of group companies.

The ultimate UK parent can provide the relevant information at any time up to three years after the determination has been made. The information provided by the ultimate UK parent will then supersede the determination. However, once the three year time limit has passed information provided by the ultimate UK parent cannot supersede the determination.


The relevant period of account of Group R is the year ended 31 March 2013. The ultimate UK parent of group R fails to give companies S, T, U and V the information necessary for the companies to make statements of allocation for either the allocated exemption of financing income or allocated reduction of financing expense.

The information should have been provided to the companies before the filing date for their tax returns, in this case 31 March 2014. HMRC has three years to make its determination - i.e. up to 31 March 2017 and the ultimate UK parent has another three years from the date of determination to supply the information, i.e. up to 31 March 2020.