HMRC internal manual

Corporate Finance Manual

CFM92435 - Debt cap: the available amount: alternative finance arrangements

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

Debt cap and alternative finance arrangements

Alternative finance arrangements are arrangements that do not involve the payment or receipt of interest. The transactions that are within the alternative finance arrangement legislation are detailed in CTA09/PT6/CH6 and guidance can be found at CFM44000.

While such arrangements will be structured differently to conventional finance arrangements, the amounts payable as alternative finance returns are, economically, finance costs of borrowing. Examples of arrangements within the alternative finance legislation are:

  • purchase and resale
  • diminishing shared ownership
  • profit share agency
  • investment bonds.

Such arrangements may, for the company standing in the position of the ‘debtor’, be required to be disclosed as financial liabilities under IAS 32: Financial Instruments: Presentation.

Regulations ensure that these amounts are taken into account in computing the available amount - see CFM92460.