Effect of a take-over on corporate interest restriction administration

Thu 13 Jun 2019

This brief note highlights an administrative point on the application of the UK corporate interest restriction (CIR) rules, that will need to be considered when a take-over is in prospect.

If an ultimate parent (company A) is taken over by company B before the end of its period of account, the date of the takeover triggers the end of a period of account for CIR purposes (TIOPA 2010 s480 and s483).

Assuming it is the nominated reporting company up to the date of the takeover, this triggers a 12 month deadline for corporate interest restriction reporting for Company A (TIOPA Sch7A para 7(5)) which is earlier than the deadline that would have applied in the absence of the takeover.

The ‘shortening’ of the reporting deadline as a result of the takeover should be borne in mind, considering there is a £500 penalty for failure to deliver a CIR return within 3 months of the reporting deadline, and £1,000 if later than that (TIOPA 2010 Sch7A Para 29).

Please get in touch with a member of the Mazars corporate tax team to discuss any aspect of corporate interest restriction rules or treasury tax issues.