Taxation (International and Other Provisions) Act 2010 (c. 8)

[F1 Part 10] U.K. [F1 Corporate interest restriction]

Textual Amendments

F1 Pt. 10: the existing Pt. 10 renumbered as Pt. 11 (except for ss. 375, 376 which are repealed), the existing ss. 372-374, 377-382 renumbered as ss. 499-507 and a new Pt. 10 (ss. 372-498) inserted (with effect in accordance with Sch. 5 para. 25(1)-(3) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 1, 10(1)(2)(a)(3) (with Sch. 5 paras. 27, 32-34)

Modifications etc. (not altering text)

C1 Pt. 10 excluded by 2010 c. 4, s. 937NA (as inserted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 7)

C2 Pt. 10 excluded by 2010 c. 4, s. 938V(d) (as substituted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 9)

C3 Pt. 10 excluded by 2010 c. 4, s. 938N(e) (as substituted (with effect in accordance with Sch. 5 para. 25(1)(2) of the amending Act) by Finance (No. 2) Act 2017 (c. 32), Sch. 5 para. 8)

[F1 CHAPTER 7 U.K. Group-interest and group-EBITDA

Group-interest U.K.

413 Adjusted net group-interest expense U.K.

(1) For the purposes of this Part the “adjusted net group-interest expense” of a worldwide group for a period of account of the group is (subject to subsection (2))—

where—

A is the net group-interest expense of the group for the period (see section 410);

B is the sum of any upward adjustments (see subsection (3));

C is the sum of any downward adjustments (see subsection (4)).

(2) Where the amount determined under subsection (1) is negative, the “adjusted net group-interest expense” of the group for the period is nil.

(3) In this section “upward adjustment” means any of the following amounts—

(a) a relevant expense amount that is brought into account in the financial statements of the group for the period in determining the carrying value of [F2 a non-financial asset or non-financial liability];

(b) an amount that [F3 , in the case of a non-financial asset,] is included in the net group-interest expense of the group for the period by virtue of section 410(5) (capitalised income written off);

(c) a relevant expense amount that—

(i) in the financial statements of the group for the period is recognised in equity or shareholders' funds, and is not recognised as an item of profit or loss or as an item of other comprehensive income, and

(ii) is brought into account for the purposes of corporation tax by a member of the group under a relevant enactment, or would be so brought into account if the member were within the charge to corporation tax;

[F4 (ca) an amount in respect of a loan relationship that is brought into account by a member of the group, for a relevant accounting period in relation to the period of account, under section 330ZA CTA 2009 (debits referable to times before UK property business etc carried on) so far as that amount has not been included in the adjusted net group-interest expense of the group for any earlier period of account;

(cb) an amount in respect of a relevant derivative contract that would be brought into account by a member of the group, for a relevant accounting period in relation to the period of account, under section 607ZA of CTA 2009, if an election under regulation 6A of the Disregard Regulations (as defined in section 421) had effect in relation to the contract, so far as the relevant amount has not been included in the adjusted net group-interest expense of the group for any earlier period of account;

(cc) a relevant income amount in respect of a loan relationship or a relevant derivative contract to which a member of the group is a party that—

(i) is recognised in the financial statements of the group for the period,

(ii) is not brought into account by a member of the group, for a relevant accounting period in relation to the period of account, and

(iii) is expected to be brought into account, or (in the case of a relevant derivative contract) would, if an election under regulation 6A of the Disregard Regulations had effect in relation to the contract, be expected to be brought into account, by a member of the group, for another accounting period, under section 330ZA or section 607ZA of CTA 2009;]

[F5 (cd) an amount that is brought into account by a member of the group, for a relevant accounting period in relation to the period of account, under section 330(3) of CTA 2009 (debits in respect of pre-trading expenditure) in accordance with an election made under section 330(1)(b) of that Act, so far as that amount has not been included in the adjusted net group-interest expense of the group for any earlier period of account;]

(d) a relevant income amount that is recognised in the financial statements of the group for the period, as an item of profit or loss, so far as it—

(i) is prevented from being brought into account for the purposes of corporation tax by a member of the group by section 322(2) [F6 , 323A, 358 or 359] of CTA 2009 F7 ..., or

(ii) would be so prevented if the member were within the charge to corporation tax.

(4) In this section “downward adjustment” means any of the following amounts—

(a) a relevant income amount that is brought into account in the financial statements of the group for the period in determining the carrying value of [F8 a non-financial asset or non-financial liability];

(b) an amount that [F9 , in the case of a non-financial asset,] is included in the net group-interest expense of the group for the period by virtue of section 410(3) (capitalised expense written off);

(c) a relevant income amount that—

(i) in the financial statements of the group for the period is recognised in equity or shareholders' funds, and is not recognised as an item of profit or loss or as an item of other comprehensive income, and

(ii) is brought into account for the purposes of corporation tax by a member of the group under a relevant enactment, or would be so brought into account if the member were within the charge to corporation tax;

[F10 (ca) a relevant expense amount, in respect of a loan relationship or a relevant derivative contract to which a member of the group is a party, that—

(i) is recognised in the financial statements of the group for the period,

(ii) is not brought into account by a member of the group, for a relevant accounting period in relation to the period of account, and

(iii) is expected to be brought into account, or (in the case of a relevant derivative contract) would, if an election under regulation 6A of the Disregard Regulations had effect in relation to the contract, be expected to be brought into account, by a member of the group, for another accounting period, under section 330ZA or section 607ZA of CTA 2009;]

[F11 (cb) an amount, in respect of a loan relationship to which a member of the group is a party, that—

(i) is recognised in the financial statements of the group for the period, but

(ii) is prevented from being brought into account in accordance with an election made under section 330(1)(b) of CTA 2009 (debits in respect of pre-trading expenditure);]

(d) a relevant expense amount that is recognised in the financial statements of the group for the period, as an item of profit or loss, so far as it—

(i) is prevented from being brought into account for the purposes of corporation tax by a member of the group by section 323A [F12 or 354] of CTA 2009 F13 ..., or

(ii) would so prevented if the member were within the charge to corporation tax;

(e) a relevant expense amount that is recognised in the financial statements of the group for the period, as an item of profit or loss, so far as—

(i) the amount represents a dividend payable in respect of preference shares, and

(ii) those shares are recognised as a liability in the financial statements of the group for the period.

[F14 (5) For the purposes of subsections (3)(a) and (b) and (4)(a) and (b)—

(a) an asset is a “non-financial asset” if it is not a financial asset for accounting purposes or it is a share in a company,

(b) a liability is a “non-financial liability” if it is not a financial liability for accounting purposes or it is in respect of a share issued by a company, and

(c) references to amounts brought into account in determining the carrying value of a non-financial asset or non-financial liability do not include amounts so brought into account as a result of writing off any part of an amount which was itself so brought into account;

and in paragraphs (a) and (b) “share” has the meaning given by section 476(1) of CTA 2009.]

(6) In subsections (3)(c)(ii) and (4)(c)(ii), “relevant enactment” means—

(a) section 321 or 605 of CTA 2009 (credits and debits recognised in equity), or

[F15 (b) section 320B of CTA 2009 (hybrid capital instruments: amounts recognised in equity).]]

[F16 (7) Subsection (8) applies, unless the reporting company elects otherwise, in relation to a period of account of a worldwide group—

(a) ending on or after 6 April 2020, and

(b) beginning before 1 April 2023.

(8) In relation to the period of account—

(a) no amount within any of paragraphs (ca) to (cc) of subsection (3) is to be treated as an “upward adjustment”, and

(b) no amount within paragraph (ca) of subsection (4) is to be treated as a “downward adjustment”.]

Textual Amendments

F2 Words in s. 413(3)(a) substituted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by Finance Act 2019 (c. 1), Sch. 11 para. 6(2)(a)

F3 Words in s. 413(3)(b) inserted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by Finance Act 2019 (c. 1), Sch. 11 para. 6(2)(b)

F4 S. 413(3)(ca)-(cc) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 8(2)

F5 S. 413(3)(cd) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 9(2)

F6 Words in s. 413(3)(d)(i) substituted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by Finance Act 2019 (c. 1), Sch. 11 para. 8(2)(a)

F7 Words in s. 413(3)(d)(i) omitted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 11 para. 8(2)(b)

F8 Words in s. 413(4)(a) substituted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by Finance Act 2019 (c. 1), Sch. 11 para. 6(3)(a)

F9 Words in s. 413(4)(b) inserted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by Finance Act 2019 (c. 1), Sch. 11 para. 6(3)(b)

F10 S. 413(4)(ca) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 8(3)

F11 S. 413(4)(cb) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 9(3)

F12 Words in s. 413(4)(d)(i) inserted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by Finance Act 2019 (c. 1), Sch. 11 para. 8(3)(a)

F13 Words in s. 413(4)(d)(i) omitted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by virtue of Finance Act 2019 (c. 1), Sch. 11 para. 8(3)(b)

F14 S. 413(5) substituted (with effect in accordance with Sch. 11 para. 22 of the amending Act) by Finance Act 2019 (c. 1), Sch. 11 para. 6(4)

F15 S. 413(6)(b) substituted (with effect in accordance with Sch. 20 para. 10(b) of the amending Act) by Finance Act 2019 (c. 1), Sch. 20 para. 8(2)

F16 S. 413(7)(8) inserted (with effect in accordance with Sch. 3 para. 30-36 of the amending Act) by Finance (No. 2) Act 2023 (c. 30), Sch. 3 para. 8(4)