CFM98430 - Interest restriction: administration: reporting requirements: the full interest restriction return: TIOPA10/SCH7A/PARA20

TIOPA10/SCH7A/PARA20

The administrative rules facilitating compliance with the Corporate Interest Restriction (CIR) legislation in TIOPA10/PT10 are built around an interest restriction return for a period of account of a worldwide group, submitted by its reporting company. The reporting company must submit a full interest restriction return via a digital form on the government gateway, or by using commercial software. For more information on this process, see the CIR internet page.

A group is not obliged to file an interest restriction return unless it has appointed a reporting company. However, if the group is subject to interest restriction, compliance with the CIR regime is much simpler and the group gains flexibility in allocating restrictions.

HMRC has the power to appoint a reporting company if the group fails to do so, though it is not intended that this should be done on a routine or speculative basis. Where a reporting company has been appointed, but no restriction is due for a period, the reporting company may elect to submit an abbreviated return.

A full interest restriction return should include details of the composition of the group, the computation of any interest restriction or reactivation cap, and an allocation of disallowances or restrictions to the UK group companies for their corporation tax accounting periods that coincide with or overlap the group’s period of account. Alternatively, an abbreviated return can be submitted in some circumstances.

This section of the guidance sets out what is required to be included in a full return, where one is required by TIOPA10/SCH7A/PARA20(2). The requirements are the same, whether the group is subject to interest restrictions for the period of account; or is not so subject, but has not elected to submit an abbreviated return.

PARA20(3)(a)

The name of the ultimate parent of the worldwide group, see TIOPA10/S473(4)(b). Where the parent has a Unique Taxpayer Reference (UTR), it must be stated. The UTR is a 10 digit number issued by HMRC where a taxpayer first registers for self-assessment. The UTR for a company is allocated by COTAX, typically when HMRC is first notified or becomes aware of the existence of a UK company, or of the UK taxable presence of a non-UK company.

PARA20(3)(b)

The return period is the period of account of the worldwide group, see TIOPA10/S480. This may not necessarily coincide with the corporation tax accounting period of some or all of the UK resident group members.

PARA20(3)(c)

The names and Unique Taxpayer References (where there is one) of all companies that were UK group companies at any time in the period of account. A UK group company is a company that is a member of the group and within the charge to UK corporation tax (TIOPA10/S492). A UK-incorporated company will not be in the charge to corporation tax where it has been inactive since incorporation or is accepted by HMRC as dormant and nothing has happened to bring it into the charge to corporation tax. Each UK group company should be identified as either a consenting or a non-consenting company for the period of account (CFM98570).

PARA20(3)(d)

A statement of calculations. This is a key component of the return and the legislation at PARA30(3)(d) sets out cross-references to other sections that describe certain items are to be calculated.

PARA20(2)(e)

Where the group is subject to interest restrictions, the return must state this and specify the total disallowed amount (S373(2)). In addition, a statement of allocated interest restrictions (specified at PARA22) must be attached to the interest restriction return.

PARA20(2)(f)

If the group is subject to interest reactivations for the period of account, this must be stated along with the interest reactivation cap (S373(3)). A statement of allocated interest reactivations (PARA25) must also be attached.

PARA20(2)(g)

There must be a declaration by the person making the return that the return is, to the best of that person’s knowledge, correct and complete. This does not prevent the inclusion of estimated information.

PARA 20(5A)

PARA20(5A) provies that HMRC may, by notice, specify further information that should be included in an interest restriction return.

Notice published 25 August 2022

  • This notice provides that, for returns submitted from 1 October 2022, the interest restriction return must also:
  • State the country of incorporation of the ultimate parent, where the parent does not have a CT UTR;
  • Provide the Legal Entity Identifier of the ultimate parent, where it has one;
  • State which (if any) companies within the group have made a qualifying infrastructure company election under TIOPA10/S433 which has effect within the period of account;
  • State the self assessment UTRs of any UK partnerships in respect of which the group has made an interest allowance (consolidated partnerships) election under TIOPA10/SCH7A/PARA18, and
  • State the adjusted net group-interest expense for the period, regardless of whether the fixed ratio or group ratio is used.