Taxation (International and Other Provisions) Act 2010 section 298

Balancing payments between group companies: no tax charge or relief

Section 298 provided that balancing payments made between group companies under the worldwide debt cap rules did not give rise to any tax charge or tax relief for the paying or receiving company, but this provision has been repealed.

• Section 298 was part of the worldwide debt cap regime in Part 7 of TIOPA 2010, which limited the amount of tax-deductible financing costs for UK groups of companies.
• The section ensured that when one group company made a balancing payment to another group company to compensate for restrictions on interest deductions, that payment itself was tax-neutral — it did not create a taxable receipt for the recipient or a deductible expense for the payer.
• The entire Part 7 worldwide debt cap regime, including section 298, was repealed by the Finance (No. 2) Act 2017 and replaced by the corporate interest restriction rules.
• The repeal took effect for periods of account of worldwide groups beginning on or after 1 April 2017.