Corporate interest restriction webinar June 2017 PDF
Preview Corporate interest restriction webinar June 2017
Corporate Interest Restriction Based on draft finance bill 2017 issued 20 March 2017 — 28 June 2017 With you today Rob Lant Head of Corporate Tax Partner, KPMG LLP Tel: +44 (0)20 7311 1853 Agenda Compliance Where are we Overview of Key issues & implications & What next? now? the rules complexities managing the impact © (“K 2P0M17G K InPtMerGn aLtLioPn,a al” )U, Ka Slimwistesd e lniatibtyil.it Ay lpl arirgtnhetsr srheispe arvnedd a. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 3 Document Classification: KPMG Public Where are we now? Where are we now? We are here! 2016 31 March 2017 25 April 2017 Summer/Autumn Consultation Draft guidance Omission from 2017 and draft legislation published by FB 2017 Measures likely to HMRC be reintroduced in a post election Finance Bill (with 20 March 2017 1 April 2017 8 June 2017 1 April 2017 start date?) Finance Bill 2017 Commencement? General election C©o 2o0p1e7r aKtiPvMe G(“K LPLMP,G a I nUtKer lnimatitoenda li”a)b, aili tSyw piasrst neenrtsithyi.p A alln rdig ah tms eremsbeervr efidrm. of the KPMG network of independent member firms affiliated with KPMG International 5 Document Classification: KPMG Public Why should you care? 1 Subject to confirmation, the rules are now “live” (from 1 April 2017) 2 Complexity – c.160 pages of draft rules + c.290 pages of draft guidance 3 Potential impact on cash tax, quarterly instalments & accounts 4 Increased cost of debt funding & implications for financing strategy 5 Significant additional compliance burden © (“K 2P0M17G K InPtMerGn aLtLioPn,a al” )U, Ka Slimwistesd e lniatibtyil.it Ay lpl arirgtnhetsr srheispe arvnedd a. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 6 Document Classification: KPMG Public Overview of the rules Key steps Identify the worldwide group, financial Step 1 statements and period of account Determine the group’s net tax-interest expense Step 2 (+ if it is less than £2m) Calculate the group’s tax-EBITDA, ANGIE, Step 3 QNGIE and Group EBITDA Calculate the disallowance (or reactivation) Step 4 under the Fixed Rate Method Calculate the disallowance (or reactivation) Step 5 under the Group Ratio Method Step Consider the impact of other elections 6 Allocate the disallowance among Step 7 UK group companies Step Comply with administrative requirements 8 © (“K 2P0M17G K InPtMerGn aLtLioPn,a al” )U, Ka Slimwistesd e lniatibtyil.it Ay lpl arirgtnhetsr srheispe arvnedd a. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 8 Document Classification: KPMG Public Overview of calculation rules Total Disallowed Amoun t = Aggregate Net Tax Interest Expens e > Interest Capacity Interest Allowance + B/F Unused Interest Allowance (Min £2m) Basic Interest Allowance + Aggregate Net Tax Interest Income Fixed Ratio Method Group Ratio Method Election Lower of: Lower of: 30% x Aggregate Tax QNGIE / Group EBITDA x EBITDA Aggregate Tax EBITDA Fixed Ratio Debt Cap Group Ratio Debt Cap (FRDC) (GRDC) ANGIE QNGIE + + Excess Debt Cap for Excess Debt Cap for Prior Period Prior Period Interest Reactivation C ap = Interest Allowanc e > Aggregate Net Tax Interest Expense © (“K 2P0M17G K InPtMerGn aLtLioPn,a al” )U, Ka Slimwistesd e lniatibtyil.it Ay lpl arirgtnhetsr srheispe arvnedd a. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 9 Document Classification: KPMG Public Overview of calculation rules Total Disallowed Amount = Aggregate Net Tax Interest Expense > Interest Capacity Key Group Inputs Key UK Inputs Interest Allowance + B/F Unused Interest Allowance (Min £2m) — Aggregate Net Tax Interest Expense (or Income) — Aggregate Tax Basic Interest Allowance + Aggregate Net Tax Interest Income EBITDA Fixed Ratio Method Group Ratio Method Election Lower of: Lower of: Key Group Inputs 30% x Aggregate Tax QNGIE / Group EBITDA x EBITDA Aggregate Tax EBITDA — ANGIE (Adjusted Net Group Interest Fixed Ratio Debt Cap Group Ratio Debt Cap Expense) (FRDC) (GRDC) — QNGIE (Qualifying Net Group Interest Expense) ANGIE QNGIE — Group EBITDA + + Excess Debt Cap for Excess Debt Cap for Prior Period Prior Period Interest Reactivation Cap = Interest Allowance > Aggregate Net Tax Interest Expense © (“K 2P0M17G K InPtMerGn aLtLioPn,a al” )U, Ka Slimwistesd e lniatibtyil.it Ay lpl arirgtnhetsr srheispe arvnedd a. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative 10 Document Classification: KPMG Public
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