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Corporate interest restriction ‘devil is in the detail’ – time limits

Corporate interest restriction ‘devil is in the detail’

This week we look at some time limits included in the CIR regime, especially those that may require action in advance of the normal compliance cycle.

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This is the thirtieth in our series of articles looking at some of the detail of the new corporate interest restriction (CIR) rules. The CIR legislation was included in Finance (No.2) Bill 2017, published on 8 September, and has now been passed by the House of Commons without amendment. The start date continues to be 1 April 2017. This week, we look at some of the time limits under the CIR regime, especially those that may require action to be taken in advance of the normal compliance cycle.

Appointing a reporting company
If a group wishes to appoint a reporting company, it must do so by filing a notice with HMRC within six months after the end of the first period of account (PoA) to which the appointment applies (or by 31 March 2018, if later). Therefore, a group which draws up accounts to 30 April 2017, 30 June 2017 or 30 September 2017 has until 31 March 2018 to appoint a reporting company, whereas a group which draws up its accounts to 31 December 2017 has until 30 June 2018. If a group does not appoint a reporting company, HMRC may appoint one for it. Therefore, groups may need to actively consider whether they wish to appoint a reporting company, as well as ensuring sufficient time is allowed to comply with the procedural formalities associated with filing.

Filing an interest restriction return
The reporting company must file an interest restriction return (IRR) for the first PoA within 12 months of the end of the PoA (or by 30 June 2018, if later) but may revise this return up to 36 months after the end of the PoA. So a group which draws up accounts to 30 April 2017 or 30 June 2017 has until 30 June 2018 to file its first IRR, whereas a group which draws up its accounts to 30 September 2017 or 31 December 2017 has until 30 September 2018 or 31 December 2018 respectively.

Filing CIR elections
Most elections within the CIR regime must be included in either the group’s IRR or a UK group company’s tax return (or otherwise made within the normal period for submission of tax returns), so can be dealt with as part of the normal compliance process. However, there are some CIR elections which must be made in advance of the tax compliance cycle and, in each case, are likely to require careful consideration and so should be considered well in advance of the deadline. In particular:

  • An election allowing a UK group company to notionally elect into the Disregard Regulations for CIR purposes must be made before 1 April 2018;
  • A public infrastructure election (and certain related exemptions regarding how the regime applies to groups and JVs) may need to be made prior to 1 April 2018; and
  • Certain elections modifying the groups PoA where the ultimate parent of the group does not prepare consolidated accounts may need to be made before 1 April 2018.

The previous articles in this series can be found here.

For further information please contact:

Rob Norris

Richard Rudman

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