Submit Corporate Interst Restriction (CIR) Return
Expert CIR compliance for UK corporate groups. We handle the complexity of interest restriction calculations and IRR filings so you can focus on your business.
Whether you need a Full Interest Restriction Return or an Abbreviated filing, we ensure total accuracy. We navigate the nuances of the legislation to protect your deductions and ensure your group remains fully compliant with HMRC.
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Is Your Group's Interest Deduction at Risk?
If your worldwide group’s aggregate net tax-interest expense (ANTIE) exceeds the £2 million de minimis threshold (pro-rated for periods other than 12 months), your UK group companies may be subject to a CIR disallowance. Get this wrong, and the consequences are severe.
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Lost Carry-Forward Relief
Unused interest allowance expires after just 5 years. Without proper IRR filing, you lose this valuable relief permanently.
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Disallowed Interest Deductions
Potentially millions in additional Corporation Tax if your CIR calculations are incorrect or poorly planned.
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Invalid IRR Filings
Valid reporting company appointment is important for CIR compliance. While HMRC has recently relaxed its approach to historic periods, groups should still ensure proper appointment procedures are followed to access elections and allocate disallowances as intended.
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Penalties Up to 100%
Maximum penalties are 30% (careless), 70% (deliberate not concealed), 100% (deliberate and concealed). These are reduced for disclosure quality and timing. No penalty where reasonable care taken or where error was due to qualified adviser and taxpayer provided all relevant information.
What is Corporate Interest Restriction?
A complex but critical part of UK corporation tax that limits deductions for corporate financing costs.
The Legislative Framework
The Corporate Interest Restriction (CIR) return regime limits tax deductions available for corporate financing costs. The CIOT has acknowledged its exceptional complexity, advising practitioners to focus on the overall framework rather than memorising detailed rules.
CIR applies to any worldwide group where Aggregate Net Tax-Interest Expense (ANTIE) exceeds the £2 million de minimis threshold.
What Does CIR Return Restrict?
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Loan relationship debits
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Derivative contract debits
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Finance lease arrangements
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Debt factoring arrangements
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Service concession arrangements
The Seven Steps to Calculate CIR Disallowance
A methodical process to determine how much of your group’s tax-interest expense must be disallowed.
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Disallowed Amount = ANTIE − Interest Capacity (IC)
If the result is negative or zero, no amount is disallowed.
Determine Worldwide Group
Identify the ultimate parent and all consolidated subsidiaries per acceptable accounting standards.
Calculate Aggregate Net Tax-Interest Expense
Total net tax-interest expense of all UK group companies. Exchange gains/losses must be excluded.
Calculate Aggregate Tax-EBITDA
Sum of each UK company's taxable profits, adjusted by adding back net tax-interest and capital allowances.
Calculate Basic Interest Allowance (BIA)
Using Fixed Ratio Method (30% of Tax-EBITDA) or Group Ratio Method (by election in full IRR).
Calculate Interest Capacity (IC)
IC = BIA + Aggregate Net Tax-Interest Income (ANTII) + Brought Forward Interest Allowance (BFIA).
Calculate Disallowed Amount
Apply the formula: Aggregate Net Tax-Interest Expense minus IC. If positive, this amount must be disallowed.
Allocate the
Disallowance
Allocate among UK group companies by election (to consenting companies) or default pro-rata formula.
Fixed Ratio Method vs Group Ratio Method
Choose the calculation method that maximises your group’s interest deduction capacity.
Fixed Ratio Method
Default approach — no election required
Limits interest deductions to the lower of:
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30% of aggregate UK Tax-EBITDA
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Fixed Ratio Debt Cap (FRDC)
Group Ratio Method
Replaces 30% with Group Ratio Percentage:
GRP = (QNGIE ÷ Group-EBITDA) × 100
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Requires valid RC appointment and full IRR
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Only beneficial if GRP exceeds 30%
Critical HMRC Update: Reporting Company Appointments
April 2025 policy change you must understand to avoid invalid filings.
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🚨 IMPORTANT — April 2025 Policy Change
HMRC has drawn a "line in the sand" at 31 March 2024. For periods ending after this date, groups must ensure a valid Reporting Company is appointed before submitting an IRR. IRRs submitted without valid RC appointment are invalid and will be rejected.
Periods ON or BEFORE 31 March 2024
Relaxed approach applies
HMRC will not pursue the specific point that failure to validly appoint a RC would invalidate a filed IRR. Groups can rely on interest restriction allocations in submitted returns.
However, HMRC may still enquire into other aspects of the return.
Periods AFTER 31 March 2024
Strict compliance required
Groups MUST ensure a valid RC is appointed BEFORE submitting an IRR. HMRC guidance at CFM98485 applies in full.
Invalid RC = Invalid IRR = Lost elections and carry-forwards.
✓ Sterling & Wells Can Help
We can review your Reporting Company appointment status and ensure full compliance with HMRC’s updated requirements for corporate interest restriction return. Contact us for a confidential review.
CIR Penalties and Common Errors
Understanding the penalty framework and avoiding the mistakes HMRC is actively targeting.
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30%
Careless Inaccuracy: Maximum of notional tax
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70%
Deliberate Inaccuracy: Maximum of notional tax
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100%
Deliberate & Concealed: Maximum of notional tax
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£3,000
Record-Keeping: For inadequate documentation
Seven Common Errors
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Late or incomplete RC appointments
invalidating subsequent IRR submissions
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IRRs submitted without valid RC
entire return is invalid
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Online form errors
e.g., QNGIE larger than ANGIE
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Missing IRR for reactivation periods
invalidates the reactivation claim
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DTR adjustments not applied
to tax-interest and Tax-EBITDA
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Pro-rate disallowance not applied
where no IRR filed
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Exchange gains/losses not excluded
failing to exclude exchange gains and losses adjustments from the calculation of tax-interest
Corporate Interest Restriction Across Industries
Corporate Interest Restriction (CIR) impacts businesses with significant financing costs across multiple sectors. We help companies navigate CIR rules, optimise interest deductions, and maintain full compliance
Multinational Groups
Complex debt structures require robust CIR compliance. We identify applicable UK entities and ensure optimal use of interest allowance.
Tech & Startups
Early-stage companies may incur losses with high financing costs. We track disallowed interest to ensure future reactivation.
Energy & Utilities
Energy and utility businesses, funded by long-term debt, use CIR rules to manage interest restrictions and ensure compliance.
Real Estate & Property
High gearing makes CIR especially relevant. We allocate interest capacity across SPVs and holding companies to maximise deductions.
What Sterling & Wells Offers
Our Corporate Interest Restriction return service supports UK and multinational groups in assessing limits, optimising interest deductions, and ensuring full HMRC compliance.
Meet the Experts Devoted to Your Success
Meet the Tax Advisors & Accountants at Sterling & Wells who make your growth and success their number one priority.
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Frequently Asked Questions
Below, we’ve answered some common questions about Corporate Intererst Retriction return to help you understand the process and your responsibilities.
Which companies or corporate groups are likely to be affected by the Corporate Interest Restriction (CIR) rules?
Any UK company or group with more than £2 million in annual net interest and other financing costs is subject to the CIR rules and may face restrictions on tax relief for those expenses.
What happens to interest expenses that are disallowed under the CIR regime? Can they be used in the future?
Under what circumstances is it mandatory to file a CIR return with HMRC?
What is the process for filing a CIR return and who is responsible for doing it?
What are the consequences if a reporting company is not appointed by the group on time?
How does CIR interact with other areas of UK tax legislation such as transfer pricing or hybrid mismatch rules?
Ready to Get Your CIR Return Sorted?
Contact our CIR specialists today and submit your corporate interest restriction return.