The Corporate Interest Restriction

Overview

• The objective of the CIR legislation – limiting the deductibility of finance costs for UK corporation tax purposes
• How CIR fits amongst other anti avoidance legislation relating to interest deductibility

Overview of the steps you will follow on the course:

• Step 1 – Identifying the worldwide group
• Step 2 – Working out the net financing costs in the UK
  • £2m de minimis rule
• Step 3 – Working out the aggregate ‘tax EBITDA’ of UK group companies
• Step 4 - Working out the interest allowance and interest capacity for the group taking into consideration the:
  • Fixed ratio debt cap
  • Group ratio debt cap
  • Excess debt cap
  • Brought forward interest allowance
• Step 5 – Working out the disallowance in the year by comparing the UK position with the group’s interest capacity
• Step 6 – Allocating the disallowance of the UK group to individual UK companies
• Reporting company and other CIR admin such as abbreviated and full returns
• Reactivating a disallowance at a later date
• CIR Elections e.g.public infrastructure

All of the above steps and topics include examples and case studies to attempt in break out groups to ensure the course is interactive.

A case study will include examples on the following:

• Determining the worldwide group
• Net UK financing costs – how to calculate them and what is included and excluded
• Amounts added and deducted to calculate the aggregate Tax EBITDA for each UK group company
• Considering the group’s overall debt position - calculating aggregate net group interest expense and qualifying net group interest expense.
• How to work out the fixed ratio and group ratio debt cap, and when to elect to apply the group ratio.
• Calculating the disallowance and reactivating a previously disallowed amount.

 

Redcliffe's trainer for the Corporate Interest Restriction course is a seasoned Chartered Accountant and Chartered Tax Adviser with over 25 years experience in both practice and industry across various tax roles focusing on corporate and international tax.

Transitioning into professional education in 2008, she has worked for tax tuition providers and also led the in-house technical training team of a large accountancy firm for several years. As a result, she has extensive experience designing and delivering tax programs for firms and clients that are both practical and commercially relevant.

Over several years she has also built a good relationship with CIOT and has contributed to their working party on the future of the CTA qualification to make sure it remains relevant.

The trainr currently provides training for professional qualifications and Continuing Professional Development (CPD) such as corporate tax updates, helping tax professionals stay current with the ever-evolving and increasingly complex world of corporate and international taxation.

• To identify when CIR is relevant
• To calculate the financing costs disallowed in a tax computation in each year
• To identify opportunities to reactivate previously disallowed finance costs
• To understand the compliance obligations of CIR and ensure a group files the appropriate CIR return

This course will be learner centric rather than lecture based so that attendees will learn by doing. Please be prepared to participate!

Attendees will have plenty of opportunity to ask questions of each other and the trainer to gain as much practical knowledge as possible.

Tax professionals who prepare or will imminently be completing tax computations and tax returns for companies likely to have an interest restriction as a result of CIR i.e. net interest expense over £2m. It would also be appropriate for individuals who are responsible for preparing abbreviated or full CIR returns, or those who need to better understand why finance costs incurred may be disallowed for tax purposes.

The corporate interest restriction legislation limits the finance costs that can be deducted by groups for tax purposes. Any group with net financing costs over £2m may be impacted.

This course helps to break down complex CIR legislation (over 150 pages) into a series of mechanical steps so that it is more digestible.

It is also highly practical as it considers the compliance obligations of a reporting company to ensure it files the most appropriate return on time and avoids interest and penalties.