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Chapter CFM91210

Document Cited in Related
Vincent
Published date16 April 2016
Record NumberCFM91210
This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.
Disregarding financing income - overview

In addition to determining the financing expense amounts of relevant group companies (see CFM91030), it is also necessary to ascertain the financing income amounts of all UK group companies. (See CFM90240 - CFM90250 for the difference between relevant group companies and UK group companies).

Financing income is relevant at two stages of the debt cap process.

First, it is necessary to aggregate the financing expense amounts and financing income amounts of a relevant group company in order to see whether it has a net financing deduction (CFM91020).

Second, it is necessary to determine which UK group companies have net financing income. Where a group of companies has a debt cap disallowance, TIOPA10/CH4 applies to exempt the financing income of UK group companies - see CFM91230. The total amounts exempted must not exceed the lower of the total disallowed amount, and the tested income amount of the group (CFM91220). The net financing income of group companies makes up the tested income amount.

From a group perspective, the process works as follows:

  • First, the UK group companies are segregated into those with financing expense amounts and those with net financing income amounts.
  • Then, the financing expense amounts of those UK group companies which are relevant group companies are totalled to give the tested expense amount (CFM91020). The excess of the tested income amount over the...

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