Taxation (International and Other Provisions) Act 2010 section 380

Reactivation of deductions: identification of the tax-interest amounts to be brought into account

Section 380 establishes the rules for determining which previously disallowed tax-interest expense amounts a company must bring back into account (reactivate) when it has spare interest capacity in an accounting period, and the order in which those amounts are reactivated.

• This section applies when a company is required to reactivate tax-interest expense amounts under section 379, but the total of amounts carried forward from earlier periods exceeds the amount that can be reactivated in the current period
• A default priority order applies: non-trading loan relationship debits are reactivated first, followed by non-trading derivative contract debits, then trading loan relationship debits, trading derivative contract debits, and finally amounts relating to finance leases, debt factoring, and service concession arrangements
• A company may elect to disapply the default ordering rules and instead choose for itself which specific tax-interest expense amounts are to be reactivated
• If such an election is made, it must identify the particular tax-interest expense amounts that the company wishes to bring back into account