Taxation (International and Other Provisions) Act 2010 section 378

Disallowed tax-interest expense amounts carried forward

Section 378 explains what happens to tax-interest expense amounts that have been disallowed under the corporate interest restriction rules, including when they can be carried forward and the circumstances in which the right to carry them forward is lost.

• A tax-interest expense amount is "disallowed" when a company is required to leave it out of account for an accounting period under the corporate interest restriction rules (sections 375 or 376).
• Disallowed amounts are generally carried forward to subsequent accounting periods, where they may potentially be reactivated (i.e. brought back into account) under section 379.
• The right to carry forward a disallowed amount is lost if the underlying trade or investment business ceases, its activities become small or negligible, or the trade becomes uncommercial and non-statutory in a later period.
• Once a disallowed amount has been reactivated and brought back into account in a later period, it cannot be carried forward any further beyond that period.