New debt cap for accounts mismatches

HMRC have published draft regulations that adjust the available amount for a mismatch between the accounts amount and tax amount. They relate to the worldwide debt cap legislation.

Mismatches can occur in two circumstances. The first is where there is a difference in the amount of a financial liability of a relevant group company disclosed in the accounts of the worldwide group and the amount of profit or loss brought into account for the purposes of part 5 of the Corporation Tax Act 2009.

In such circumstances the available amount can be adjusted (either by addition or subtraction) to eliminate the mismatch.

The second circumstance is where a ‘late interest’ debit is treated under CTA 2009, s 373 as not accruing until it is paid. The regulations allow the late interest to be subtracted from the available amount.

Provisions within the debt cap rules already deal with late interest accruing prior to the introduction of the debt cap rules; the question is whether a similar rule would be suitable for interest subject to s 373 after the introduction of debt cap.

An adjustment to the available amount will potentially affect the amount of financing income exempted from the debt cap rules; it is not proposed that any consequential adjustments be made to the exemption of financing income.

The draft regulations illustrate a way such an adjustment can be achieved.

Comments on the proposed regulations should be emailed to Lesley Hamilton or Margaret Kayser no later than 22 November.

Issue Extract

debtcaptn.pdf

Issue: 4281 / Categories: News , Companies