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HMRC internal manual

Corporate Finance Manual

From:
HM Revenue & Customs
Published:
16 April 2016
Updated:
5 August 2026 - See all updates

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.

For periods of account ending before 31 March 2026, a group is not obliged to file an interest restriction return unless a reporting company has been appointed by either the group or HMRC. 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 if a reporting company is appointed.

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. Note that for periods of account ending on or after 31 March 2026, even where a reporting company is appointed by the group, there is no requirement to submit an interest restriction return, although it may be beneficial to do so.

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(3)(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(3)(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(3)(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.

Changes introduced by Finance Act 2026

For periods of account ended on or after 31 March 2026, a reporting company appointed by the group is not obliged to file an interest restriction return. A reporting company appointed by HMRC must still file a return. A replacement reporting company appointed by HMRC must file a return unless a return for the period has already been submitted by the previous reporting company.

Where a reporting company files a full interest restriction return, this must meet the requirements set out above.

Finance Act 2026 introduces additional requirements for periods ended on or after 31 March 2026. These additional requirements will become effective following Regulations by HMRC. This is to allow time for IT systems to be updated. The additional information items that will be required following the Regulations to be made by HMRC are:

  • the name and UTR of the reporting company for the period of account (PARA20(3)(za));
  • for each UK group company listed, whether that company has authorised the appointment of the named reporting company (PARA20(3)(c)), and
  • a statement confirming that each company authorising the appointment of the reporting company was an eligible company and that, together, those companies represented more than half of all eligible companies for the period of account (PARA20(3)(ca)).