 Worldwide debt cap - Budget 2010
Changes to the worldwide debt cap legislation, announced in the March 2010 Budget, will be enacted at the earliest opportunity and apply from the date that the debt cap came into force (i.e. periods of account of the worldwide group beginning on or after 1 January 2010). Groups will however be able to elect that some changes to the gateway test should apply only prospectively.
Two of the changes relate specifically to groups which apply the special rules for securitisation companies. These changes remove the results of such companies from the calculation of the 'available
amount' and will allow companies involved in capital market arrangements to transfer additional corporation tax liabilities arising as a result of the debt cap to other members of the group.
In applying the gateway test, account will now be taken of long term arrangements which, despite not having the legal form of loans, have the economic effect of loans and give rise to an interest-like return.
The legislation will also now make it clear that a limited liability partnership cannot be the ultimate parent of a group of companies for debt cap purposes. Finally, it will be made clear that distributions made by industrial and provident societies, normally treated as interest for tax purposes, will not constitute finance expenses for the purposes of the debt cap rules.
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