Section 372 | Overview ^F1

(1)This Part contains provision that—^F1

(a)disallows certain amounts that a company would (apart from this Part) be entitled to bring into account for the purposes of corporation tax in respect of interest and other financing costs, and^F1

(b)allows certain amounts disallowed under this Part in previous accounting periods to be brought into account in later accounting periods.^F1

(2)In this Chapter—^F1

(a)section 373 defines some key concepts including, in particular, “the total disallowed amount” in relation to a period of account of a worldwide group, and^F1

(b)section 374 provides for Schedule 7A to have effect.^F1

(3)Chapter 2 provides for—^F1

(a)the disallowance in certain circumstances of tax-interest expense amounts of companies that are members of a worldwide group, and^F1

(b)the carrying forward of disallowed tax-interest expense amounts, and for bringing those amounts into account in certain circumstances in relation to a later period of account of the worldwide group.^F1

(4)Chapter 3—^F1

(a)defines “a tax-interest expense amount” and “a tax-interest income amount” of a company for a period of account of a worldwide group, which are amounts that are (or apart from this Part would be) brought into account for the purposes of corporation tax,^F1

(b)defines “the net tax-interest expense” of a company for a period of account of a worldwide group, which is any excess of the company's tax-interest expense amounts for the period over its tax-interest income amounts for the period,^F1

(c)defines “the net tax-interest income” of a company for a period of account of a worldwide group, which is any excess of the company's tax-interest income amounts for the period over its tax-interest expense amounts for the period, and^F1

(d)defines “aggregate net tax-interest expense” and “aggregate net tax-interest income” of a worldwide group for a period of account of the worldwide group, which are made up of each member of the group's net tax-interest expense or net tax-interest income for the period.^F1

(5)Chapter 4 contains provision about the calculation of “the interest capacity” of a worldwide group for a period of account of the group, which is the aggregate of the interest allowance for the period and any unused interest allowance of the group from the previous 5 years (or, if that aggregate is less than the de minimis amount, the de minimis amount).^F1

(6)Chapter 5 makes provision about the calculation of “the interest allowance” of a worldwide group for a period of account of the group.The interest allowance for a period of account is calculated using the fixed ratio method unless the group elects for the group ratio method to be used for the period.^F1

(7)Chapter 6 defines concepts used in Chapter 5 including—^F1

the “tax-EBITDA” of a company for a period of account of a worldwide group (which is an amount derived from amounts brought into account for the purposes of corporation tax);

the “aggregate tax-EBITDA” of a worldwide group for a period of account of the group (which is an amount derived from the tax-EBITDA of members of the group).

(8)Chapter 7 defines additional concepts used in Chapter 5 including—^F1

“the net group-interest expense”, “the adjusted net group-interest expense” and “the qualifying net group-interest expense” of a worldwide group for a period of account of the group (which are amounts derived from the financial statements of the worldwide group);

the “group-EBITDA” of the worldwide group for a period of account of the group (which is an amount derived from the financial statements of the worldwide group).

(9)Chapter 8 contains provision altering the way in which this Part has effect in relation to the provision of public infrastructure assets or the carrying on of certain other related activities.^F1

(10)Chapter 9 contains special provision altering the operation of certain provisions of this Part in relation to—^F1

(a)particular types of company (for example, banking companies, companies carrying on oil-related activities, REITs or insurance companies), or^F1

(b)particular types of transaction or accounting (for example, long funding operating leases or fair value accounting).^F1

(11)Chapter 10 contains rules connected with tax avoidance.^F1

(12)Chapter 11 contains the remaining interpretative and supplementary provision, including definitions of—^F1

“related party”;

“a worldwide group”;

“ultimate parent”;

“period of account” of a worldwide group.