CFM98575 | Interest restriction: administration: reporting requirements: consenting and non-consenting companies

The following sets out the position for periods of account ended on or after 31 March 2026. For details of the rules for earlier periods, please see CFM98570.

TIOPA10/SCH7A/PARA10

The definition of a worldwide group in TIOPA10/S473 is based on international accounting standards (IAS). This means there may be entities in a worldwide group with substantial external stakeholders over which the ultimate parent does not have complete control and economic ownership. This leaves open the possibility of conflicts of interest between different members of a group. The CIR legislation contains provisions to enable such potential conflicts to be managed.

In particular, it is appropriate that UK group companies should have protection against, say, a disproportionately high allocation of the group’s disallowances. But, by way of balance, it should not be possible for a dissenting group member to disrupt efficient administration by a reporting company. The concept of consenting and non-consenting companies (TIOPA10/SCH7A/PARA10) seeks to achieve such a balance. While expected to be rare, it is possible for a reporting company to be appointed by companies that are all non-consenting companies.

Broadly speaking, a consenting company is a company that has agreed to accept and be bound by discretionary apportionments of interest restrictions by the reporting company. A non-consenting company has not so agreed. Its basic protections are that it may not be apportioned more than its pro-rata share (PARA23) of the group’s total disallowed amount, and may elect to file on a basis that differs from that in the group’s interest restriction return (TIOPA10/S375(3)).

According to PARA10(2), a company is a consenting company in relation to a worldwide group’s interest restriction return if it has notified the reporting company to this effect and has not also notified the reporting company that it no longer wishes to so consent.

A consenting company may become a non-consenting company by notifying the reporting company to this effect (PARA10(2)(b)). Equally, a company that was treated as a non-consenting company may cease to be so, in relation to future interest restriction returns, including revised returns, by notifying the reporting company to this effect. For information on how the group might manage this process, see CFM98477.

It is also open to a non-consenting company to elect (under S375(3)) that it does not accept the allocated disallowance. It must then submit or amend its company tax return for each relevant period of account to include its own computation of the disallowance due, on a pro-rata basis.

Consenting or non-consenting status of all the UK group companies must be included in the interest restriction return.