CFM98487 | Interest restriction: administration: reporting requirements: appointment by HMRC

This guidance applies to periods of account ending on or after 31 March 2026. For periods ending before 31 March 2026, please see CFM98480.

TIOPA10/SCH7A/PARA4

HMRC has the power to appoint a reporting company in certain circumstances. This is to allow HMRC to ensure compliance with the rules. Where a reporting company is appointed by HMRC for a period it is required to submit an interest restriction return for the period.

Appointment where no interest restriction return submitted

PARA4(1) allows HMRC to appoint a reporting company for a period of account of a worldwide group where no return has been submitted within 18 months of the end of the period of account. The appointment by HMRC supersedes any appointment by the group under PARA1.

An appointment by HMRC under PARA4(1) must be made within four years of the end of the period of account.

A later appointment is permitted where an amount in a company tax return is still capable of being altered - see FA98/SCH18/PARA88. This is most likely to be the case where there is an open enquiry into a company tax return. HMRC may also appoint a reporting company where new groups are identified in the course of an enquiry.

Retrospective appointment where interest restriction return purported to be filed but no valid appointment of reporting company by group

HMRC may also appoint a reporting company where a return has purported to be submitted but the group had not validly appointed a reporting company beforehand (PARA(4)(6A)). In such cases, the company appointed by HMRC is treated as if it had been appointed immediately before the submission of the return. This ensures that the return remains valid.

Case workers should not normally need to rely on this power, as groups are able to appoint reporting companies in similar circumstances (see CFM98477). However, this remains a route open to case works where it becomes apparent that no reporting company has been appointed and an appointment is necessary to protect HMRC’s position.

Please consult the BAI policy team before using this power.

Further information about HMRC appointments

The company appointed must be a UK group company for at least part of the period of account and must not be dormant.

It is possible that HMRC will be uncertain what the correct period of account is. Accordingly the appointment can be made by reference to a date or dates that would begin, end or be contained within a period of account.

An appointment by HMRC is valid only for the period of account to which it relates.

Many groups will not be subject to a CIR disallowance. This may be because the groups aggregate net tax-interest expense (ANTIE) falls below the de minimis limit of £2m per annum or because tax-EBITDA and net group-interest expense (NGIE) are sufficiently high in relation to ANTIE, thereby resulting in no CIR disallowance arising. HMRC will not appoint reporting companies on a routine or speculative basis.

Where neither the group nor HMRC has appointed a reporting company but a CIR disallowance arises, any UK group company with a net tax-interest expense is required to apply a CIR disallowance computed on a pro-rata basis in its company tax return for any relevant accounting period. See CFM98635 for information on relevant accounting periods and CFM98654 for details of what must be reported in the company tax return.