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Chapter CFM97610

Document Cited in Related
Vincent
Published date16 April 2016
Record NumberCFM97610
CourtHM Revenue & Customs
IssuerHM Revenue & Customs

The corporate interest restriction (CIR) rules apply to any company chargeable to corporation tax. ‘Company’ is defined by CTA10/S1121 to include, any body corporate or unincorporated association, other than a partnership, co-ownership scheme (as defined by FSMA2000/S235A), a local authority, or a local authority association. It follows that the rules will embrace bodies corporate set up by Royal Charter, Act of Parliament or Church of England Measure, registered societies companies limited by guarantee and unincorporated associations. While these organisations are generally in the charge to corporation tax in respect of their profits, the position can be complicated where income is not in fact charged to tax. This may arise, for instance:

  • because some of their activities are not regarded as being in the scope of corporation tax (see BIM24000 onwards for examples of mutual companies and other organisations such as professional organisations); or
  • because there are reliefs or exemptions due, notably where the organisation concerned is established for charitable purposes only and satisfies the definition of charity for tax purposes (FA10/SCH6/PARA1(1)).

In the context of charities, CTA10/PT11/CH3 provides for a number of exemptions available to charitable companies, defined in FA10/SCH6/PARA1(2) as a charity that is a body of persons. For general guidance on taxation matters specific to charities, see Charities: detailed guidance notes on how the tax system operates.

The CIR rules apply after most other reliefs and deductions have been claimed so if interest is an expense of an activity that gives rise to profits that are not subject to corporation tax, for instance, the exempt profits of organisations falling within BIM24000, or where the net result of the activity is subject to an statutory exemption or relief, such as those in CTA10/PT11 applying...

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