CFM98485 - Interest restriction: administration: reporting requirements: appointment of a reporting company by HMRC: exceptional circumstances TIOPA10/SCH7A/PARA4

Groups and their agents should have processes in place to ensure that a reporting company has been appointed before the submission of each interest restriction return.   

In particular, when submitting an interest restriction return, the group and its advisers should ensure they can evidence that the reporting company has been validly appointed. If there is any uncertainty, groups should make a new reporting company appointment within the statutory time limit.  

Only in exceptional circumstances where something prevented the group from appointing a reporting company will HMRC appoint a reporting company on behalf of a group.  

Where a group believes there are exceptional circumstances which justify HMRC making an appointment on behalf of the group, it should approach HMRC as soon as reasonably practicable with full details. In considering cases, HMRC will consider the group’s explanation and whether the failure to appoint is reasonable in the context of the particular circumstances of the group. 

Circumstances where HMRC would normally accept that we should appoint: 

  • Where HMRC has given the group incorrect information. For example, where HMRC had initially told a group that their appointment was valid, but on a later check it is found not to contain required information. 

  • Where the group has been prevented from making an appointment due to reasons outside of their control and this has been specifically raised with HMRC ahead of the statutory deadline. 

Where there are exceptional circumstances, the group must approach HMRC as soon as possible. 

Circumstances which HMRC would not normally accept that we should appoint: 

  • Where the group was not aware of the need to make the appointment of a reporting company. This would include, for example, in takeover situations where the group failed to realise that a new CIR group was created and the old appointment does not carry over. 

  • Where the group has incorrectly assumed that the submission of an interest restriction return constituted an appointment of a reporting company. 

  • Where the group had placed reliance on HMRC checking an appointment had been validly made on the submissionof an interest restriction return.  

  • Where the group had not taken reasonable steps to appoint a reporting company, and HMRC had subsequently identified that no reporting company had been appointed.  

  • Where a group was aware of the need to make the appointment, but had failed to do so. Or where it has instructed an adviser to make the appointment on their behalf and the adviser hadfailed to do so.   

  • Where HMRC have already appointed a reporting company on behalf of the group for a previous period and the group have failed to appoint a reporting company by the statutory deadline in a subsequent period. 

  • Where there are changes in the company’s circumstances (for example, a subsequent fall in the company’s profits) that has meant it is now more advantageous for the group to appoint a reporting company and file interest restriction returns.  

We would not normally accept that ignorance of the law would amount to exceptional circumstances for failing to appoint a reporting company in the context of groups within the scope of CIR.  

In addition, HMRC does not accept that, just because it had a more relaxed policy for appointing reporting companies on behalf of groups when the rules first came into force, it is obliged to continue to appoint reporting companies in all cases.