Mark Minihane and Ken MacKenzie examine compliance issues surrounding the proposed debt cap rules
Summary of the debt cap rules
The worldwide debt cap (‘debt cap’) provisions (Taxation (International and Other Provisions) Act 2010 Part 7) seek to limit the available UK interest deductions in large groups so that UK interest deductions cannot exceed a group’s gross worldwide external interest expense.
The rules apply for accounting periods beginning on or after 1 January 2010 and many groups will now be within their scope. Indeed calendar year-end groups will already be in the second accounting period to which the new rules apply.
As well as giving rise to potential cash tax implications for a group including solely UK domestic groups the complexity of the debt cap provisions may also lead to a significant compliance burden and these aspects are explored further below.
Summary of potential outcomes...
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Mark Minihane and Ken MacKenzie examine compliance issues surrounding the proposed debt cap rules
Summary of the debt cap rules
The worldwide debt cap (‘debt cap’) provisions (Taxation (International and Other Provisions) Act 2010 Part 7) seek to limit the available UK interest deductions in large groups so that UK interest deductions cannot exceed a group’s gross worldwide external interest expense.
The rules apply for accounting periods beginning on or after 1 January 2010 and many groups will now be within their scope. Indeed calendar year-end groups will already be in the second accounting period to which the new rules apply.
As well as giving rise to potential cash tax implications for a group including solely UK domestic groups the complexity of the debt cap provisions may also lead to a significant compliance burden and these aspects are explored further below.
Summary of potential outcomes...
If you or your firm subscribes to Taxjournal.com, please click the login box below:
If you do not subscribe but are a registered user, please enter your details in the following boxes:
