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HMRC internal manual

Corporate Finance Manual

Debt cap: anti-avoidance rules: EEA financing income: effect of anti-avoidance rules applying

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

Where Conditions A to C in TIOPA10/S311 are met the anti-avoidance rules apply

Where all three conditions within TIOPA10/S311 apply for a period of account of the worldwide group, the counteraction is that the financing income is not exempted from corporation tax by virtue of TIOPA10/S299.

The counteraction applies to a particular period of account - just because the conditions A to C are met for one period of account it does not automatically follow that financing income from the source in question is tainted for all subsequent periods of account. However if the conditions are met for one period of account, they are likely to be met for subsequent periods of account.

Where there is a scheme intended to ensure that financing income is exempted from corporation tax under TIOPA10/S311, the scheme in its entirety is considered when applying the counteraction.