CFM98230 - Interest restriction: carry forward rules: carry forward of interest disallowance

TIOPA10/S378 - S379 and SCH7A/PARAS 25 - 26

Where a UK group company has been subject to an interest disallowance in a period, the amounts of disallowed tax-interest become an attribute of the company and it is possible for the amounts disallowed to be reactivated in a later period. Carry forward is at the level of the individual UK group company, rather than the worldwide group.

The disallowed tax-interest can be carried forward indefinitely until they are subject to reactivation. However, amounts expire in the following circumstances:

• In relation to trading amounts, where the company ceases to carry on the trade or its scale becomes negligible;
• In relation to trading amounts, where the trade becomes uncommercial and non-statutory; or
• In relation to amounts taken into account in computing the profits or losses of an investment business, where the company ceases to carry on the business or its scale becomes negligible.

The carry forward of disallowed amounts and their reactivation is dealt with in the pages of this guidance in more detail as follows:

Identification of items left out of account	company level	CFM98660
Disallowed amounts carried forward	company level	CFM98670
Reactivation of disallowed amounts	company level	CFM98680
Statements of allocated interest reactivations	group level	CFM98610
Computing tax-interest available for reactivation	company and group level	CFM98620
Identification of reactivated amounts	company level	CFM98690
Set off of disallowances and reactivations	company level	CFM98700