This part of GOV.UK is being rebuilt – find out what beta means

HMRC internal manual

COTAX Manual

Claims / reliefs: CTSA claims frameworks: Corporate Interest Restriction

Following the introduction of the Corporate Interest Restriction legislation in Finance (No 2) Act 2017, this guidance introduces the process for dealing with CIR Appointments, Returns, Elections and Company Amendments, which will be handled by the Business Tax and Customs area of Customer Services Group.

Most multinational groups have external borrowings on which they pay interest and other financing costs. Corporate Interest Restriction (CIR) legislation has been designed to combat attempts to obtain excessive tax relief for net interest and similar financing costs in line with Action 4 of the Organisation for Economic Co-operation and Development (OECD) work on Base Erosion and Profit Shifting Project (BEPS). The aim of these new rules is to restrict deductions for a group’s net interest and similar financing costs to an amount that is in line with the activities taxed in the UK.

Any group with net financing costs of more than £2 million per annum may be affected. If a group is affected, they are required to:

·Appoint a reporting company for the group

·Submit a CIR return annually (which may be abbreviated or full depending on particular circumstances)

·Submit elections, either for the group or individual companies, if they want certain conditions to apply

·Each company within the group is required to restrict the interest expense they claim to the amount allocated to them and this may involve submitting an amended company return after the normal CT amendment time limit has expired.