Section 395 | Amount of interest allowance for a period of account that is “unexpired” in later period ^F1

From legislation.gov.uk

16 November 2017

(1)This section contains provision for determining for the purposes of this Chapter the extent to which an interest allowance of a worldwide group for a period of account (“the originating period”) is “unexpired” in a later period of account of the group (“the receiving period”).^F1

(2)If the receiving period—^F1

(a)begins 5 years or less after the originating period begins, and^F1

(b)ends 5 years or less after the originating period ends,^F1

all of the interest allowance for the originating period is unexpired in the receiving period.

(3)If the receiving period begins 5 years or more after the originating period ends, none of the interest allowance for the originating period is unexpired in the receiving period.^F1

(4)Subsection (5) applies if the receiving period—^F1

(a)begins more than 5 years after the originating period begins, and^F1

(b)ends 5 years or less after the originating period ends.^F1

(5)The amount of the interest allowance for the originating period that is unexpired in the receiving period is—^F1

Formula

(A - B) \times \frac{X}{Y}

where—

A is the interest allowance for the originating period;

B is—

the aggregate net tax-interest expense of the group for the originating period, or

if lower, the interest allowance for the originating period;

X is the number of days in the period—

beginning with the day on which the receiving period begins, and

ending with the day 5 years after the day on which the originating period ends;

Y is the number of days in the originating period.

(6)Subsection (7) applies if the receiving period—^F1

(a)begins 5 years or less after the originating period begins, and^F1

(b)ends more than 5 years after the originating period ends.^F1

(7)The amount of the interest allowance for the originating period that is unexpired in the receiving period is—^F1

Formula

(C - D) \times \frac{X}{Z}

where—

C is the aggregate net tax-interest expense of the group for the receiving period;

D is—

the interest allowance of the group for the receiving period, or

if lower, the aggregate net tax-interest expense of the group for the receiving period;

X has the same meaning as in subsection (5);

Z is the number of days in the receiving period.

(8)Subsection (9) applies if—^F1

(a)the receiving period—^F1

(i)begins more than 5 years after the originating period begins, and^F1

(ii)ends more than 5 years after the originating period ends, and^F1

(b)subsection (3) does not apply.^F1

(9)The amount of the interest allowance for the originating period that is unexpired in the receiving period is the lower of the amounts determined under subsections (5) and (7).^F1