CFM98360 – Corporate Finance Manual – HMRC Internal Manual



The business interest restriction applies to tax-interest and tax-EBITDA amounts. These in turn are based on the amounts taken into account for corporation tax purposes in the tax return and calculations of individual corporations.

However, there are two specific exceptions that apply upon transition to the rules when the amounts relate to accounting and tax changes prior to April 1, 2017:

  • The first exception applies when there has been a change in accounting method and the period of application of the new accounting method, referred to as the latest period, began before April 1, 2017. In this case, debits or credits taken into account in connection with the change in the Accounting Practice Regulations 2004 (SI 2004/3271) relating to this change in accounting method are disregarded for the purposes of the restriction of business interests.
  • The second exception applies to ignore transitional adjustments arising from F(No.2)A15/Sch7 which are considered under Para115/116 (transitional adjustments relating to loan relationships) or Para119/120 (transitional adjustments relating to contracts derivatives).
  • These amounts are therefore not included as tax interest or tax-EBITDA amounts under the scheme.
  • Similarly, these amounts would not be included in group interest and group EBITDA (relevant to {changes in accounting} where an alternative calculation choice has been made).

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