Corporation Tax debt cap
HMRC have published new draft regulations which relate to the corporation tax debt cap. The regulations relate specifically to the provisions which allow for the disallowance for corporation tax purposes of net financing deductions of the UK members of a group to the extent that the total of those deductions exceeds the “available amount”.
The purpose of the new draft regulations is to allow a wider range of financing expenses to be taken into account in calculating the "available amount".
This includes alternative finance arrangements (such as Islamic finance), sale and repurchase arrangements and certain structured finance arrangements. The new draft regulations will ensure that qualifying financing expenses will be treated as if they were loans for the purposes of Corporation Tax.
Comments on the draft legislation should be sent to HMRC by 22 October 2010.