Interest in international groups of companies
The Finance Act introduced new rules on worldwide debt caps for accounting periods beginning on or after 1 January 2010. These apply where the UK debt:
- is £3 million or more
- exceeds 75% of the gross worldwide debt.
If you do fall within the provisions you are required, broadly, to calculate the proportion of total worldwide interest attributable to the UK as a proportion of UK:worldwide debt.
If the actual interest paid in the UK exceeds the calculated amount there is a disallowance.
Again this is complicated. It also means that calculating the current year’s tax, eg for the purposes of instalments, is virtually impossible unless you have total knowledge of overseas companies’ plans and activities.
Cathy Corns is a tax adviser and a partner at Mercer & Hole. The views given in this blog are personal to the author.
Date: 24th August, 2009
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