CIR: HMRC’s concession for reporting company nominations
06/05/25
Following concerns raised by tax advisers and professional bodies, HMRC has reconsidered its approach to reporting company (RC) appointments under Corporate Interest Restriction (CIR). For a brief overview of the CIR regime, please see our blog here.
HMRC has often challenged CIR returns when a group did not appoint a reporting company on time or made mistakes when doing so. Now, HMRC are offering a partial concession in these situations.
Benefits of CIR returns
Groups can choose not to file a CIR return, but filing a CIR return has many advantages. Firstly, a group can gain more control as it can choose how to allocate disallowances to specific companies, instead of using a default pro-rata method.
Secondly, there are potential tax savings as it allows the use of elections, for example the group ratio method, which can reduce disallowances by using the group’s actual gearing ratio instead of a flat 30% of tax-EBITDA.
However, a CIR return is only valid if the group has first nominated a RC. In recent years, HMRC has increasingly challenged returns where no valid nomination was made on time before the deadline.
A shift in HMRC’s stance
Before June 2023, HMRC often used its discretion to backdate the appointment of a reporting company, which enabled CIR returns to remain valid.
However, from June 2023, HMRC adopted a stricter approach, and they would only accept a late nomination if it benefited them. This rigid position often leads to unnecessary tax costs for clients, consequently raising questions about whether it aligns with HMRC’s responsibility to collect the correct amount of tax.
Latest developments
For periods ending between 31 March 2021 and 31 March 2024, HMRC will not challenge the validity of making a CIR return where the RC nomination was late or omitted. Earlier periods may also benefit, subject to HMRC confirming it has the legal authority.
Going forward, the RC nomination must be made on time before filing a CIR return.
How we can help
If you’re unsure whether these changes affect you, get in touch with us today. We can help you take advantage of HMRC’s latest concession and improve your tax profile. Contact Joel Calitchi at joel.calitchi@mgr.co.uk or Esther Ollech at esther.ollech@mgr.co.uk for further guidance.
