UK tax help

Corporate Interest Restriction (CIR) | Group

Overview

This topic provides an overview of using the CIR sheets in Group.
Three sets of CIR sheets can be developed into the group module:
  • Corporate Interest Restriction
  • Corporate Interest Restriction – Abbreviated interest restriction return
  • Corporate Interest Restriction – Full interest restriction return
The sheets can be used CIR company sheets to provide a complete end-to-end CIR calculation.
note
For the links between the CIR company sheets and the CIR group sheets to function, the Transfer group data – Corporate interest restriction sheet must be included in each company file.
You can insert Corporate Interest Restriction return sheets into an existing group file or a group set up specifically for CIR purposes.

Completing the Sheets

Interest Restriction Group Detail
This sheet contains details required for the Interest Restriction Return (IRR). It should be completed fully before the IRR (full and abbreviated) is filed electronically. The sheet contains some permanent data and some period-specific data. The details that are not period-specific roll forward to the next period.
The sheet also contains the declaration that must be completed before you file the IRR online.
Group Elections
This sheet lets you show an election made or revoked in period. The
Election in place at start of period
 column only needs to be completed in the first year of using the ONESOURCE Corporate Tax software. Selecting the appropriate elections on this sheet:
  • Ensures that the relevant sections and calculations are visible in the CIR sheets. For example, setting the
    Group ratio election
     to either
    Election in place at start of period
     or
    Election made in period
    , the display on the Group calculations sheet changes so that the
    Group ratio calculation
     section is displayed and the
    Fixed ratio calculation
     is shown in non-printing format.
  • Populates the Group elections sheets in the full and abbreviated IRRs for electronic filing with HMRC.
The IRR requires additional information when certain elections are made. Use the free-format text boxes on this sheet to provide the additional required information within the IRR. These must be completed for a successful submission of the IRR.
UK Group Companies – Values and Allocations
This sheet has two main functions:
  • Collates values and data from the individual company CIR sheets. The sheet aggregates these values for the Group calculations to be performed. These values are:
    • Tax-EBITDA
    • Net tax-interest expense
    • Net tax-interest income
    • A+B-C+D-E (Restricted interest available for reactivation)
  • Allocation of restrictions or reactivations to individual companies. When the Group calculations result in either a restriction or a reactivation, the Group must allocate this adjustment to the individual companies. The total restriction or reactivation from the Group calculations sheet links to this sheet. The amount must then be manually allocated to the relevant Group company/companies. Data entry cells are provided for this allocation. Validations have been added to prevent an over-allocation of either a restriction or a reactivation to any one company.
Further points to note about this sheet are:
  • Group companies are assumed to be consenting companies by default. When this is not the case, set the consenting company selector to No.
  • Non-ONESOURCE companies that form part of the Group can be entered using the data entry rows at the bottom of the sheet.
Pushing down the adjustments to company files
Once you complete the allocation, you need to push these values down to the relevant company files. Select the down arrow on the toolbar that shows
Push data down through entity hierarchy
.
This action pushes the adjustments to the Transfer group data – corporate interest restriction sheet in the company file. When the software has completed this, select the
Data updates available
 notifications in the company file and the group file to ensure the adjustments are correctly processed in both files.

Group Calculations

Core CIR calculations are performed on this sheet. Any restrictions or reactivations are then passed back to the UK group companies Values and Adjustments sheet, where they can be allocated to the relevant companies.
There are several sections to this sheet:
Interest allowance - fixed ratio and Interest allowance - group ratio
The default calculation method for the sheet is the Fixed ratio. This calculation section displays when the sheets are first developed into a file. Selecting the
Group ratio
 election on the Group elections sheet switches the display to the Group ratio calculation section. Enter
Debt cap brought forward
 amounts manually the first time you use the software. You can use the Group-interest and Group-EBITDA supporting sheets to assist with the calculation of certain values required for the
Fixed ratio
 and
Group ratio
 calculations.
Interest capacity
This section is fully automated and calculates the interest capacity for the period.
Interest restriction
This section is fully automated and calculates the interest restriction in the period for scenarios where the aggregate net tax-interest expense is greater than interest capacity.
Interest reactivation
This section is fully automated and calculates the unused interest allowance for the period for scenarios where interest allowance is greater than the aggregate net tax-interest expense. Where the Group has previously been subject to interest restrictions, it then determines if any interest restriction brought forward can be reactivated in the period and finally, if any interest allowance is available to carry forward to a later period.
Group-Interest
This sheet is a data entry template for the calculation of Adjusted net group-interest expense (ANGIE) and Qualifying net group-interest expense (QNGIE). The calculated values link to the Group calculations sheet.
Group-EBITDA
This sheet is a data entry template for the calculation of Group-EBITDA for the Group ratio calculation. The calculated values link to the Group calculations sheet.
Interest Allowed Carried Forward
This sheet has two main functions:
  • To track unused interest allowance from period to period until it is used or expires
  • To use the interest allowance brought forward against aggregate net tax-interest expense not offset by current period interest allowance.

Receiving Period

The
Receiving period
 column is for the current period values which are automatically linked from the Group calculations sheet. When the Group is rolled forward, any unused IA for the current period (the receiving period) will become an originating period on the far-right hand side of the sheet and the subsequent period will now populate the
Receiving Period
 column.
Each roll-forward will in turn place a new Originating Period column as the far right-hand side column.
The first table below shows six periods made up as one receiving period (Period 6) and 5 originating periods (Periods 1 to 5). The second table illustrates what happens upon roll forward. In other words, the receiving period (Period 6) forms a new column on the far right to become Period 6. A new Period 7 will then populate the Receiving Period column.
Receiving period
Originating period
Originating period
Originating period
Originating period
Originating period
Current period (or Period 6)
Period 1
Period 2
Period 3
Period 4
Period 5
On roll forward:
Receiving period
N/A
Originating period
Originating period
Originating period
Originating period
Originating period
Current period (or Year 7)
Year 1 – unused IA expired and column no longer visible
Period 1
Year 2
Year 3
Year 4
Year 5
When the column rolls forward from the receiving period to the originating period, the period of account start date and end date rolls forward to this new column, together with any amounts of Interest allowance unused.
Where all periods are 12 months in length, any unused interest allowance from
Period 1
 expires after five years. The amount of unused interest allowance that has expired is shown in the period under the section
Utilisation of brought forward interest allowances
. The amount that expires and is therefore removed from the sheet is automatically calculated and removed. Once expired, the
Period 1
 column will no longer display.
Where all periods are not 12 months in length, the software will perform the calculations based upon the dates provided.

Originating Period

The originating period columns are periods prior to the receiving period.
Interest allowance brought forward is offset when, in the receiving period, the full amount of aggregate net tax-interest expense has not been offset by current period interest allowance. Interest allowance brought forward is offset in the order in which it arose, from the earliest originating period through to the most recent.

Setting up the Sheet

Unused interest allowance that arose in periods prior to first using the software can be entered manually in the originating period section. Use the
Insert
option on the menu to insert a new column. For each earlier period with unused interest allowance, a period of account start date and end date must also be entered. The periods must be entered with the earliest originating period on the left and later originating periods on the right, as shown in the tables.
The original unused interest allowance of the originating period is required for the s395(5) calculation box and must be completed for each originating period column added. This value is required for the Interest allowance expired calculations.
note
The original unused interest allowance is the total amount of interest allowance that was unused in the year it arose. This may be a higher amount than the unused amount still being carried forward.
Once the sheet has been set up for periods prior to using the software, the sheet will automatically roll forward and calculate amounts of Interest allowance that are both used in a period and expire in a period and no further manual entries should be required.

UK Group Companies — Summary

This sheet summarises the calculations of Net tax-interest expense/income and Tax-EBITDA from all CIR company sheets linked to the Group. The sheet is automated and provides an overview of the values at a Group level and is intended as a tool for review purposes. It does not form part of the calculations.
The company values linking to this sheet are the full period company values for Net tax-interest expense/income and Tax-EBITDA from the company files. When a company is non-coterminous with the worldwide group, or a company has joined or left the Group during the period, this total includes disregarded period amounts. These amounts can be removed from the sheet manually using the
Disregarded period amounts
 rows in each section if required.

This article applies to:

  • PRODUCT: ONESOURCE Corporate Tax