Taxation (International and Other Provisions) Act 2010 section 382

The tax-interest expense amounts of a company

Section 382 defines what counts as a "tax-interest expense amount" for a company within a worldwide group, covering loan relationship debits, derivative contract debits, and implicit financing costs in certain arrangements, with rules for adjusting amounts when accounting periods do not align with the group's period of account.

• A tax-interest expense amount is any amount brought into account for corporation tax purposes that qualifies as a relevant loan relationship debit, a relevant derivative contract debit, or the implicit financing cost in a finance lease, debt factoring transaction, or service concession arrangement accounted for as a financial liability.
• If the company is a charity at the end of the group's period of account, amounts that would otherwise qualify as tax-interest expense amounts are excluded from the definition.
• Where a company's accounting period does not fully coincide with the group's period of account, or the company was not a group member throughout, the tax-interest expense amount is reduced on a just and reasonable basis by the portion referable to the non-overlapping or non-membership periods (and may be reduced to nil).
• If an amount was originally denied a deduction under another tax rule (such as the hybrid mismatch rules) but a subsequent rule later permits the deduction, the amount is treated at that later time as still meeting the original qualifying condition, so it remains a tax-interest expense amount.