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HMRC internal manual

Corporate Finance Manual

Debt cap: interaction with other rules: Corporate Interest Restriction: Periods of account straddling 1 April 2017

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

FB17/SCH10/PARA26 {#}

The corporate interest restriction (“CIR”), TIOPA10/PT10 has effect from 1 April 2017 (F(2)A17/SCH5/PT4).  The debt cap, TIOPA10/PT7 is repealed with effect from that date (F(2)A17/SCH5/PARAS10, 26. Rules in (F(2)A17/SCH5/PT4) determine the modifications made to both regimes for periods that straddle 1 April 2017.

See CFM98320 {#}  for commencement rules relating to the CIR.

Where a worldwide group draws up financial statements for a period which straddles 1 April 2017 this is referred as a straddling period of account. In this situation the CIR commencement rules apply on the basis that the actual accounts had not been drawn up,.

Instead, both the CIR and debt cap rules will apply on the basis that the group had drawn up financial statements for two notional periods of accounts as follows:

  • a period beginning with the start of the actual period for which accounts are drawn up and ending with the 31 March 2017,
  • a period beginning with 1 April 2017 and ending with end of the actual period for which accounts are drawn up.

The Corporate Interest Restriction rules will then apply for the notional period of account commencing 1 April 2017.  The debt cap applies for the period ending on 31 March 2017.

Assumptions made in respect of a notional period of account to 31 March 2017

GAAP applicable to notional accounts

Where the actual financial statements for the straddling period are acceptable financial statements, the notional financial statements are treated as drawn up  under the same financial reporting standards, otherwise it is assumed that they are drawn up under IAS - F(2)A17/SCH5/PARA5(6),(7).


The commencement rules provide that a simple time apportionment in line with CTA 2010/s1172 should be used by default -F(2)A17/SCH5/PARA 26(8). However, if a time basis apportionment gives an unjust or unreasonable result, then the figures should be attributed to the periods on a just and reasonable basis - PARA 26(9). In applying a just and reasonable basis, consideration would need to be given as to the amounts that would be recognised for each notional periods had the group prepared financial statements for each period.