Section 400 | The debt cap ^F1

From legislation.gov.uk

16 November 2017

(1)For the purposes of section 397 (and this section), “the fixed ratio debt cap” of a worldwide group for a period of account of the group is the sum of the following amounts—^F1

(a)the adjusted net group-interest expense of the group for the period;^F1

(b)the excess debt cap of the group that was generated in the immediately preceding period of account of the group (if any) (see subsections (3) to (7)).^F1

(2)For the purposes of section 398 (and this section), “the group ratio debt cap” of a worldwide group for a period of account of the group is the sum of the following amounts—^F1

(a)the qualifying net group-interest expense of the group for the period;^F1

(b)the excess debt cap of the group that was generated in the immediately preceding period of account of the group (if any) (see subsections (3) to (7)).^F1

(3)Where no group ratio election is in force in relation to a period of account of a worldwide group (“the generating period”), “the excess debt cap” of the group that is generated in the period is (subject to subsections (5) and (6))—^F1

Formula

A - B

where—

A is the fixed ratio debt cap of the group for the generating period;

B is 30% of the aggregate tax-EBITDA of the group for the generating period.

(4)Where a group ratio election is in force in relation to a period of account of a worldwide group (“the generating period”), “the excess debt cap” of the group that is generated in the period is (subject to subsections (5) and (6))—^F1

Formula

A - B

where—

A is the group ratio debt cap of the group for the generating period;

B is the group ratio percentage of the aggregate tax-EBITDA of the group for the generating period.

(5)Where the amount determined under subsection (3) or (4) is negative, “the excess debt cap” of the group that is generated in the period is nil.^F1

(6)Where the amount determined under subsection (3) or (4) is greater than the carry-forward limit, “the excess debt cap” of the group that is generated in the period is the carry-forward limit.^F1

(7)For this purpose the “carry-forward limit” is the sum of the following amounts—^F1

(a)the excess debt cap generated in the period of account of the group immediately preceding the generating period (if any);^F1

(b)the total disallowed amount of the group in the generating period.^F1

(8)See—^F1

section 373 for the meaning of “the total disallowed amount”;

section 405 for the meaning of “aggregate tax-EBITDA”;

section 413 for the meaning of “adjusted net group-interest expense”;

section 414 for the meaning of “qualifying net group-interest expense”.