CFM90150 – Corporate Finance Manual – HMRC Internal Manual

These guidelines apply to worldwide group accounting periods ending on or before April 1, 2017.

Structure of Debt Ceiling Rules Legislation

The debt ceiling rules are contained in TIOPA2010/Part7 and various regulations.

Part 7 is structured as follows

  • Chapter 1 presents the debt ceiling rules.
  • Chapter 2 contains the gateway test and the rules relating to the exclusion of financial services.
  • Chapter 3 explains how the total disallowed amount is calculated and how it is distributed among the relevant group companies of a group.
  • Chapter 4 provides the rules which determine the particular amounts of financial income receivable by UK companies from a group of a group which may be exempt from corporation tax where there has been a refusal under the chapter 3.
  • Chapter 5 contains rules which exempt certain intra-group financial income from corporation tax where the paying company is resident in the European Economic Area (other than the United Kingdom) and that company is denied a deduction for tax purposes.
  • Chapter 6 contains anti-avoidance rules for the debt ceiling measure.
  • Chapter 7 defines the meaning of finance charge amounts and finance income amounts and contains rules that allow certain amounts to be excluded from debt ceiling calculations.
  • Chapter 8 defines the “tested expenditure amount”, which is the UK measure of net financial expenditure, and the “tested income amount”, which provides a limit to the amount of fundraising income that can be exempt under the tax cap. the debt.
  • Chapter 9 explains how the “Amount available”, which is the group or global measure of net finance costs, is calculated.
  • Chapter 10 contains interpretative and complementary provisions.

In addition to Part 7, there are a number of regulations that support the primary legislation. The Rules are:

  • The Corporation Tax (Funding Costs and Income) Regulations 2009 – these regulations provide the detailed rules for making refusal declarations (under Part 3); statements of contempt (under part 4); designation of the authorized company that can make declarations; and attribution of denial, disregard, and sharing of information when statements are not made.
  • The Corporation Tax (Exclusion of Short Term Lending Relationships) Regulations 2009 – these regulations provide rules which explain the circumstances in which financing arrangements will not be treated as short term lending relationships.
  • The Corporation Tax (Acceptable Accounting Standards) Regulations 2009 – these regulations provide details of the accounting standards (other than IAS) acceptable for the purposes of the debt ceiling rules.
  • Tax Treatment of Fundraising Costs and Income (Available Amount) Regulations 2010 – these regulations include certain fundraising expenses in the Amount Available.
  • The Tax Treatment of Funding Costs and Income (Adjustment of Mismatches) Regulations 2010 – these regulations make adjustments to the amount available where accounting differences arise in the treatment of the same expense in the accounts of the relevant company and consolidated accounts of the worldwide group.
  • The Tax Treatment of Funding Costs and Funding Income (Excluded Schemes) Regulations 2013 – these regulations outline certain arrangements to which the anti-avoidance rules in Chapter 6 of the primary legislation should not apply.

The debt limit was repealed by the Finance (No.2) Act 2017 with effect from 1 April 2017, when it was replaced by the Corporate Interest Restriction. Guidance on the new rules is available at:

Special rules apply when the account period straddles April 1, 2017. See CFM93060 of the draft guidance for more details.


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