Taxation (International and Other Provisions) Act 2010 section 373

Meaning of "subject to interest restrictions", "the total disallowed amount" etc.

Section 373 defines several key terms used throughout the corporate interest restriction rules, including when a worldwide group is subject to interest restrictions, the total disallowed amount, the interest reactivation cap, and when a group is subject to interest reactivations.

• A worldwide group is "subject to interest restrictions" in a period of account when its aggregate net tax-interest expense exceeds its interest capacity for that period.
• The "total disallowed amount" is the amount by which net tax-interest expense exceeds interest capacity; if there is no excess, it is nil.
• The "interest reactivation cap" is the group's interest allowance minus its aggregate net tax-interest expense, floored at nil (it cannot be negative).
• A group is "subject to interest reactivations" when the reactivation cap is not nil and at least one UK corporation tax member has previously disallowed interest available for reactivation.