UK tax forms

Corporate Interest Restriction (CIR) | Company

Overview

This topic provides you with an overall understanding of how to use the Corporate Interest Restriction (CIR) sheets in a company file.
The sheets have two main functions:
  • Calculation of the values required by the Reporting Group (‘Group’), including net tax-interest expense and Tax-EBITDA
  • Processing of the restrictions and reactivations allocated to it by group.
The sheets can be used alongside the CIR sheets in the Group module to provide a complete end-to-end CIR calculation and online submission.
There are two CIR sheets:
  • Corporate interest restriction – values: This sheet calculates Net tax-interest expense/income and Tax-EBITDA and collates the amounts that link to Group to enable the interest restriction calculations to be performed.
  • Corporate interest restriction – adjustments: Interest restrictions or reactivations allocated to the company by Group are included on this sheet. This sheet is also used to track interest restrictions brought forward and carried forward.

Completing the Sheets

Corporate Interest Restriction - Values
Key Values
To calculate Net tax-interest expense, trade and non-trade loan relationship and derivative values from the Loan Relationships and Derivatives sheet as a starting point. Manual entries are required to adjust these values to arrive at a tax-interest expense total for each of the five categories. Other financing arrangements must be added or linked manually. You can insert rows as required.
note
When an adjustment is required to the net tax-interest expense/income for DTR the
DTR adjustment – s388
 row displays. You must enter the required value manually. However, you can find the amount on the Double tax relief sheet in the
DTR on loan relationships / derivatives for CIR
 column. It is not possible to link the two the sheets in this instance.
To calculate Tax-EBITDA, the adjusted corporation tax earnings is the starting point. Adjustments required to arrive at Tax-EBITDA are either automatically linked to the relevant source sheet or can be added or linked manually.
Disregarded periods
The
Disregarded periods
 section deals with situations where the company period is different to that of the worldwide group. This section also deals with situations where a company has either joined or left the CIR Group during the period. You can select an option for the
Do the company values fall entirely within the CIR group period of account?
 option.
  • If the company period is the same dates as the worldwide group period, select
    Yes
     (default).
  • If the company period does not correspond to the worldwide group period, select
    No
    . An additional section appears, which must be completed manually to ensure that the correct values link to the Group.
Joiners and leavers
When a company has either joined or left the Group during the period, you must make an apportionment of the net tax-interest expense/income and Tax-EBITDA. This is necessary to ensure that only post-acquisition values and the pre-disposal values are linked to Group when a company has joined the Group during the period.
The options
Has the company joined the CIR group during the period?
 and
Has the company left the CIR group during the period?
 in the
Disregarded periods
 section let you specify when a company has joined or left the Group during the period.
When either of these scenarios apply, change the relevant selector to “Yes” and enter only the values you wish to link to Group in the data entry cells provided.
Corporate Interest Restriction – Adjustments
Current period restrictions/reactivations
When you allocate an adjustment that is pushed down by group, interest restrictions or reactivations are automatically linked to this sheet. You can also enter adjustments manually if necessary. Typically a restriction or reactivation is then allocated automatically to one of the five tax-interest categories in the order specified in the legislation.
You can change the automatic allocation to manual by overriding the election and selecting Yes for the relevant selector.
Interest restriction or reactivation relating to loan relationships or derivatives flows back to the Loan relationships and derivatives sheet. Any interest restriction or reactivation allocated to Other financing arrangements will link directly to the Adjustment of profit sheet unless the computation contains more than one business. In this case, analyse the adjustment on this sheet to identify which business the tax-interest relates to.
note
A memorandum has been provided underneath this section which shows the Net tax-interest expense/income for each of the five tax-interest categories calculated on the first CIR sheet “Corporate interest restriction – values”. This may be useful when the default allocation order has been over-ridden as it shows the maximum set off for each category.
This section also tracks interest disallowed in previous periods, which can be reactivated in a future period. A data entry column lets you remove interest restriction brought forward amounts extinguished during the period. These can no longer be carried forward.
Interest restriction brought forward and carried forward amounts are automatically linked to the Tax accounting FRS102 and IFRS sheets when these are present in the file.
A+B-C+D-E
This sheet also calculates the A+B-C+D-E value required by Group for the amount available for reactivation calculation. Where the company has not joined the Group in the current period no further work is required. Where the company has joined the Group during the period, adjustments may be required manually where a restriction or reactivation has been allocated to the company by the previous Group.

This article applies to:

  • PRODUCT: ONESOURCE Corporate Tax