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The corporate interest restriction (CIR) essentially limits the amount of interest expense a company can deduct from its taxable profits if the UK aggregate net interest expense of the worldwide group to which it belongs is over £2 million. The actual mechanics of the CIR calculation are highly complex (the legislation is over 150 pages long) and are detailed below.

Before looking at the detail of the rules, it is important to note that there are a few points that are specific to the CIR regime, as follows:

1. •

   the rules operate in relation to the worldwide group and by reference to the period of account (PoA) of the group for which the consolidated financial statements are prepared. A worldwide group usually refers to an ultimate parent and each of its consolidated subsidiaries, although it is possible to have a single-company worldwide group

2. •

   the CIR works on a group rather than a company-by-company basis which is different to most taxing provisions. What this means is that most calculations required by the rules are carried out at