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Chapter CFM92580

Document Cited in Related
Vincent
Published date16 April 2016
Record NumberCFM92580
CourtHM Revenue & Customs
IssuerHM Revenue & Customs
This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.
Interest paid to educational and public bodies

Companies that are subsidiaries of certain types of public body may find themselves in a similar position to subsidiaries of charities (see CFM92570).

Government departments and Northern Ireland departments are debarred from being corporate entities by section 340 (4), and therefore cannot be the ultimate parent of a group (see CFM90270). But this does not apply to local authorities and certain other bodies of a public nature: it is possible for them to come within the definition of ‘corporate entity’ in section 340, so that if they have subsidiary companies, the entity and its subsidiaries will constitute a group.

Since such entities are not within the charge to corporation tax, interest paid to them by subsidiaries will not constitute a financing income amount. For this reason, TIOPA10/PT7/S327 provides that an amount is not treated as a financing expense amount of a company where the creditor is any of a prescribed list of bodies.

These are

  • Designated educational establishments, within the meaning of...

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