Taxation (International and Other Provisions) Act 2010 section 495

Financial statements: different treatment by group or members

Section 495 gives HMRC the power to make regulations adjusting corporate interest restriction calculations where there are differences between how amounts appear in a worldwide group's consolidated financial statements and how individual group members treat those amounts for tax or accounting purposes.

• HMRC can make regulations to adjust Chapter 7 calculations (covering adjusted net group-interest expense, qualifying net group-interest expense and group-EBITDA) when group financial statements include or omit an amount that a group member treats differently for tax or accounting purposes.
• Regulations may be conditional on an election or other specified circumstances and can apply retrospectively to any period beginning in the same calendar year the regulations are made.
• Specific regulations apply from 1 April 2017 where a loan relationship is recognised at fair value in the group accounts but at amortised cost in the issuer company's own accounts — in this case, the group accounts are treated as if the loan were recognised on an amortised cost basis.
• Further regulations apply from 1 April 2017 where an intra-group loan was derecognised from the group accounts before 31 March 2017 (because a group member acquired the loan or the creditor joined the group) — any gain or loss on that derecognition is spread over the remaining term of the loan on a just and reasonable basis.