CFM95270 - Transitional Rules

F(No.2)A17/SCH10/PT4

The Corporate Interest Restriction has effect from 1 April 2017. All periods of account of a worldwide group beginning on or after that date will be subject to the Corporate Interest Restriction.

The Worldwide Debt Cap rules are repealed with effect from 1 April 2017.

Periods straddling 1 April 2017

A group may draw up financial statements for a period that straddles the commencement date of 1 April 2017. So long as they cover a period not exceeding 18 months and are drawn up within 30 months of the beginning of the period, they will determine the first period of account to which the interest restriction is applied, and may be utilised as the starting point for determining amounts.

Where there is a straddling period of account, the legislation treats the group as having drawn up statements running from the beginning of the straddling period to 31 March 2017 and from 1 April 2017 until the end of the straddling period, in place of the actual financial statements. The former period is subject to WWDC and the latter to the Corporate Interest Restriction.

Where it is expedient to apportion amounts included in the actual financial statements between these two periods, the apportionment defaults to a time basis. However if this would work unjustly or unreasonably, the apportionment must be made on a just and reasonable basis.

The basic requirement is that the accounts treated as drawn up should be in accordance with International Accounting Standards. But if other acceptable financial statements are drawn up in accordance with other standards, accounts for the period to which the Corporate Interest Restriction applies are treated as drawn up under those standards.

Where no consolidated financial statements exist the group is subject to the Corporate Interest Restriction as if it had drawn up financial statements beginning 1 April 2017. There is detailed guidance on determining periods of account and how amounts are to be ascertained.

Commencement and transition

There are a number of additional commencement and transitional provisions applied in certain circumstances, including transitional rules for qualifying infrastructure companies