Corporation Tax – Worldwide debt cap
HMRC have published new regulations relating to the worldwide debt cap. This restricts corporation tax relief for UK financing costs where these costs exceed the financing costs of the worldwide group.
The new ‘correction of mismatches regulations’ relate to the tax treatment of financing costs and income. A mismatch may occur if the amount disclosed in the financial statements of the worldwide group in respect of a liability differs from the amount accounted for in respect of the same liability by the UK member of the worldwide group.
The regulations which are effective for accounting periods beginning on or after 1 January 2011 alter the way in which the available amount is calculated in situations where there is a mismatch.