The Corporate Interest Restriction

Part One

• The training starts by covering the acceptable bases of preparing financial statements for the CIR purpose

• Identifying the worldwide group

• What to do if you cannot obtain financial information about group companies in other jurisdictions

• Public Infrastructure Election – when it can be made, and the pros and cons of doing so

• Appointing a reporting company

• Asking HMRC to appoint a reporting company

• Interest allowance – the fixed ratio rule and its variables

• Interest allowance – the group ratio rule and its variables

• Interest capacity – the £2 million de minimis rule Examples of calculating the above

UK tax-interest expense – definition, what is included and excluded, with examples

Aggregate UK tax-EBITDA – deriving the correct figure from the accounts and from tax law, with examples

Adjusted (worldwide) net-group interest expense (“ANGIE”) – what is included and excluded, with examples, is considered in this CIR course

Treatment of capitalised interest and elections that can vary the basic treatment

Examples Used During The Course

• Worldwide group evaluation

• Reporting company appointment

• Filing abbreviated returns

• Fixed ratio rule interest allowance

• Group ratio rule interest allowance overview

• CIR calculation examples

• ANGIE

• Capitalised interest election as corporate interest restriction legislation

Course Q&As

• The opportunity to raise examples you have come across and discuss the corporation tax implications

• Regular pauses for questions on each topic covered to take questions and queries

Part Two

• CIR accounting covers: the Group Ratio rule - calculating the group ratio

• Qualifying net group interest expense – how it is derived from ANGIE

• Meaning of related party interest expense – inclusions and exclusions with examples

• Worldwide group EBITDA – adjustments needed to the worldwide consolidated EBITDA, with examples

• Adjustments where UK companies have foreign income suffering tax at source

• Treatment of unused interest allowances from previous years

• Treatment of disallowed interest from previous years

• Excess debt cap carried forward – maximising the interest deduction each period

• Worldwide group EBITDA elections – chargeable gains, tax-interest, pension contributions, employee share acquisitions, changes in accounting policy

• Use of blended rate in the group ratio rule, where a corporate interest restriction group is owned by corporate shareholders

• Adjustments for leases where International Financial Reporting Standards (IFRS) 16 is used

• Case study example and spreadsheet solution

Examples Used During CIR Course

• QNGIE

• Related party interest identification

• Excess debt cap carried forward

• Reactivation of previous years’ disallowed interest

• Unused allowances brought forward

• A case study bringing in all the knowledge gained from the course

• Using a spreadsheet to model CIR calculations to minimise the resources needed

Course Q&As

• The opportunity to raise examples you have come across and discuss the CIR tax implications

• Regular pauses for questions on each topic covered throughout interest restriction training to take questions and queries

Training Objectives

• This CIR course covers how to determine whether a company qualifies for exemption under the Public Infrastructure Exemption rules.

• Participants will understand the situations in which a company or group may face a disallowance of ‘excess’ interest expense.

• Calculate the variables needed to identify if a disallowance is necessary.

• Identify when it is beneficial to file an abbreviated CIR return and what to do if one should have been filed for earlier periods.

• Understand the elections that can be made to vary the amounts used in the calculations and the pros and cons of using them.

• Understand how disallowed interest can be relieved (‘reactivated’) in future periods. Understand how unused amounts can be carried forward and used in future periods.

• Finally, interest restriction training includes guidance on building a spreadsheet-based CIR model to automate key calculations wherever possible.

Training Course Summary

Sessions are designed to help attendees understand when companies might face a disallowance of interest under the corporate interest restriction rules.

Training guides delegates through the process of identifying which companies are relevant to the calculations and whether any group companies can be disregarded under the Public Infrastructure Exemption.

CIR management delegates will learn the mechanics of the calculations and how these can be modelled in a spreadsheet to save time each year. They will be taken through the main features of each variable that forms part of the calculations, and how the variables can be affected by elections that can be made.

The importance of filing abbreviated returns will be highlighted during CIR accounting sessions, where there is a possibility that the company or group will face a disallowance in future years.