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Chapter CFM92830

Document Cited in Related
Vincent
Published date16 April 2016
Record NumberCFM92830
This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.
Interaction between TIOPA10/PT7/CH5, CH7 and CH8

TIOPA10/PT7/CH5 is a self-contained provision with its own definition of ‘financing income amounts’ (CFM92820). TIOPA10/S305(6), however, expressly states that the provisions of Chapter 7 apply to amounts that are financing income amounts for Chapter 5 purposes as they do to amounts that are financing income amounts by virtue of TIOPA10/S314.

This means, for example, that if a group treasury company has made an election under TIOPA10/S316 that its financing expense and financing income amounts are not treated as such for debt cap purposes, it cannot disregard a receipt from an EEA group company under Chapter 5.

But TIOPA10/S305(6) applies only to Chapter 7, and not to the definition of ‘tested income amount’ and ‘net financing income’ in Chapter 8. TIOPA10/S330(2)(a) refers only to a company’s financing income amounts under TIOPA10/314.

This means that financing income amounts for Chapter5 purposes are disregarded before computing a company’s net financing income or net financing deduction. In other words, the Chapter 5 provisions take priority over the remainder of the debt cap computational rules.

Example 1

A UK company receives interest of £550,000 from a member of the group resident in an EEA territory in year ended 31 December 2013, which is a period of account of the worldwide group. The...

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