Thin capitalisation: practical guidance: creating agreements between HMRC and the group: example of an agreement: model ATCA - appendix 3 - short accounting period
HMRC has issued a model ATCA the body of which is at INTM520090. It is not intended for it to be followed slavishly, but it may serve as a template for many cases and as an aide memoire for the main features which HMRC is likely to expect to see in an agreement.
The model’s agreement’s third appendix is as follows:
Short Accounting Period
The calculation of the gearing ratio will need to take account of a short accounting period. This is done by increasing actual EBITDA for a short period pro rata in order to calculate an annual equivalent.
The interest cover calculation does not need to be similarly adjusted as the interest expense and EBITDA will both be calculated for the same period.