Part 9 –Calculation of the available amount
167.Part 9 deals with the computation of the ‘available amount’, which in broad terms is the external gross finance expense of the worldwide group of companies. This Part sets out the basic rules for computing the ‘available amount’, and provides for the external financing expense arising from certain activities to be disregarded in calculating the available amount.
168.Paragraph 73 provides that the ‘available amount’ for a period of account of the worldwide group is derived from amounts disclosed in the group’s financial statements for that period.
169.Sub-paragraph (1) provides a list of the amounts to be included.
170.Sub paragraphs (1)(a) – (1)(d) cover interest and amortised discounts and premiums, together with the ancillary costs of borrowing. Subparagraph (1)(e) refers to financing costs implicit in payments under finance leases. This is intended to cover the interest or finance element of finance lease payments. . Sub-paragraph (1)(f) covers the financing costs relating to debt factoring. Sub-paragraph (1)(g) enables further types of financing costs to be designated as falling within the ‘available amount’ by regulation.
171.Sub-paragraph (2) excludes from the available amount dividends arising from preference shares (whether those shares are redeemable or non-redeemable) to the extent that those shares are recognised as a liability of the group.
172.Paragraph 74 excludes from the available amount financing costs arising from oil extraction activities if a member of the group is treated as carrying out a separate trade of oil extraction activities, as defined by section 502 of ICTA and the financing costs under consideration are taken into account when calculating the profits of that oil extraction trade for corporation tax purposes.
173.Paragraph 75 excludes from the available amount financing costs relating to profits which are dealt with under the tonnage tax regime provided two conditions are met.
174.Sub-paragraph (2) provides that the group company must be a tonnage tax company for the purposes of the UK tonnage tax regime.
175.Sub-paragraph (3) provides that the external finance amount has been taken into account in calculating the relevant shipping profits of the tonnage tax company or is treated as a non-trading loan relationship credit of the company or companies outside the ring fence under paragraphs 61 or 62 of Schedule 22 to FA 2000.
176.Paragraph 76 excludes from the available amount financing costs relating to profits exempted from corporation tax by virtue of the special rules applying to Real Estate Investment Trusts. The conditions for exclusion are that a group company is treated as carrying out a separate business under section 113 of FA 2006 and that the external finance amount is brought into account in calculating the profits of that separate tax exempt business.
177.Paragraph 77 confirms that in the absence of any contrary provision, expressions used in Part 9 have the meaning given by IAS.
