Two sets of regulations make consequential amendments to other legislation to ensure the new corporate interest restriction rules work as intended.
Two sets of regulations make consequential amendments to other legislation to ensure the new corporate interest restriction rules work as intended.
The Corporate Interest Restriction (Financial Statements: Group Mismatches) Regulations, SI 2017/1224, address three situations where accounting differences between the entity and group level could affect application of the new corporate interest restriction rules. These regulations will: (1) recognise a loan relationship on the amortised cost basis in the group accounts where it is recognised as such in the issuer company’s financial statements and is subject to fair-value accounting; (2) on a debt buy-back of an external loan between two group members, spread the gain or loss on derecognition of the loan in the group accounts over the remainder of the loan term on a just and reasonable basis; and (3) include the finance charge arising on employer asset-backed pension contributions as an item of interest expense. The regulations come into force on 29 December 2017 and have effect for accounting periods beginning on or after 1 April 2017. HMRC consulted during April and May on a draft version of the regulations, to which have been added the provision in respect of asset-backed pension contributions.
The Corporate Interest Restriction (Consequential Amendments) Regulations, SI 2017/1227, aim to prevent the new corporate interest restriction rules having unintended consequences for collective investment vehicles and securitisation companies. They exclude distributions made by collective investment vehicles from the definition of ‘tax-interest expense amount’ and, for securitisation companies, treat the ‘retained profit’ figure as the net ‘tax-interest income amount’, adjusted for any management fees paid within the UK group. The regulations come into force on 29 December 2017 and have effect for accounting periods beginning on or after 1 April 2017. HMRC consulted on a draft version during March and April 2017.
Two sets of regulations make consequential amendments to other legislation to ensure the new corporate interest restriction rules work as intended.
Two sets of regulations make consequential amendments to other legislation to ensure the new corporate interest restriction rules work as intended.
The Corporate Interest Restriction (Financial Statements: Group Mismatches) Regulations, SI 2017/1224, address three situations where accounting differences between the entity and group level could affect application of the new corporate interest restriction rules. These regulations will: (1) recognise a loan relationship on the amortised cost basis in the group accounts where it is recognised as such in the issuer company’s financial statements and is subject to fair-value accounting; (2) on a debt buy-back of an external loan between two group members, spread the gain or loss on derecognition of the loan in the group accounts over the remainder of the loan term on a just and reasonable basis; and (3) include the finance charge arising on employer asset-backed pension contributions as an item of interest expense. The regulations come into force on 29 December 2017 and have effect for accounting periods beginning on or after 1 April 2017. HMRC consulted during April and May on a draft version of the regulations, to which have been added the provision in respect of asset-backed pension contributions.
The Corporate Interest Restriction (Consequential Amendments) Regulations, SI 2017/1227, aim to prevent the new corporate interest restriction rules having unintended consequences for collective investment vehicles and securitisation companies. They exclude distributions made by collective investment vehicles from the definition of ‘tax-interest expense amount’ and, for securitisation companies, treat the ‘retained profit’ figure as the net ‘tax-interest income amount’, adjusted for any management fees paid within the UK group. The regulations come into force on 29 December 2017 and have effect for accounting periods beginning on or after 1 April 2017. HMRC consulted on a draft version during March and April 2017.
