UK announces technical amendments to corporate interest restriction rules

On July 21, 2020, the UK tax authority issued a policy paper identifying two technical amendments to the corporate interest restriction for corporation tax.

The corporate interest restriction restricts the ability of large businesses to reduce their taxable profits through excessive UK interest expense. It encourages alignment of the location of taxable profits with the location of economic activity and is consistent with the UK’s more territorial approach to corporation tax.

Legislation will be introduced in Finance Bill, 2020-21 to clarify the way special provisions in the corporate interest restriction rules apply in the context of a Real Estate Investment Trust, to take into account that UK property businesses of non-resident companies are now within the charge to corporation tax rather than income tax.

The amendment will also make sure that no penalties arise for the late filing of an interest restriction return if there is a reasonable excuse for the failure, bringing the administrative rules in line with those for corporation tax self-assessment.
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See Policy Paper