Restriction of Companies Interests (Electronic Communications) Regulations 2022: corporation tax

Who is likely to be affected

Large companies subject to corporation tax (CT) which incur or may in the future incur net interest expense and other similar financing costs (as part of corporation tax) in excess of £2 million per annum.

General description of the measure

The regulation changes the way companies can deliver certain notices and declarations relating to the restriction of corporate interests (RIC) from 1 September 2022. It makes electronic filing compulsory through the use of methods approved by HMRC.

Political objective

HMRC has developed two electronic methods for businesses to submit certain notices and declarations relating to the Company Interest Restriction Regime – an online form and an application programming interface (APIs). In line with HMRC’s digital strategy, regulations require all businesses to submit submissions using one of these two methods. It is expected that this will provide customers with certainty that submissions have been accepted, reduce HMRC’s inefficiencies in locating and processing documents and improve HMRC’s ability to detect inaccuracies.

Context of the measure

The corporate interest restriction regime in Part 10 and Schedule 7A, Taxation (International and Other Provisions) Act 2010, applies from 1 April 2017.

These rules restrict the ability of large companies to reduce their taxable profits through excessive interest charges in the UK. They are part of wider government changes to encourage alignment of the location of taxable profits with the location of economic activity and are in line with the UK’s territorial approach to corporate taxation.

To enable certain notices and declarations to be submitted electronically, HMRC launched an online form in 2018 and an application programming interface (APIs) in 2021.

HMRC continued to accept business interest restriction notices and returns through a number of different channels. This has resulted in duplication of effort for clients who are unsure of the best submission route, inefficiencies for HMRC in processing submissions and an increased risk of errors going undetected. Limiting the allowed channels will solve these problems.

Detailed proposal

Effective date

The regulations will come into force on September 1, 2022.

The regulations will apply to all filings of the specified notices and declarations, including those relating to account periods ending before September 1, 2022.

Current law

Administrative provisions relating to the restriction of corporate interests are included in Schedule 7A of the Taxation (International and Other Provisions) Act 2010.

These regulations apply the powers conferred by paragraph 3 of the said annex and by articles 135 and 136 of the finance law of 2002.

Proposed revisions

The regulations provide that the following notices and returns may only be given electronically by methods approved by HMRC:

• appointments of a reporting company

• revocations of an existing reporting company

• interest restriction returns

• revised declarations of restrictions of interest

Approved methods are specified in the HMRC guidelines to which the regulations refer.

Summary of impacts

Impact on Treasury (£m)

2022 to 2023 2023 to 2024 2024 to 2025 2025 to 2026 2026 to 2027 2027 to 2028
nil nil nil nil nil nil

This measure should have no impact on the Treasury.

Economic impact

This measure is not expected to have significant economic impacts with the Office of Budget Responsibility’s indirect effects process. This will apply when, for example, a measure affects inflation or growth.

Impact on individuals, households and families

There is no impact on individuals since this measure only affects businesses.

The measure should not affect the formation, stability or breakdown of the family.

Equalities impacts

It is not expected that there will be any impacts for people in groups that share protected characteristics.

Impact on businesses, including civil society organizations

This measure is expected to have a negligible impact on approximately 6,800 groups potentially affected by the corporate interest restriction regime. One-time costs will include change familiarization and staff development. No ongoing costs are anticipated.

Overall, this measure should improve businesses’ experience of dealing with HMRC, as data collection will be automated, eliminating the risk of human error and duplicate data.

This measure should have no impact on civil society organisations.

Operational impact (£m) (HMRC or other)

HMRC’s operational impacts for this change are expected to be negligible.

The guidelines contained in the Corporate Finance Manual will be updated.

The pages of the GOV.UK website relevant to the restriction of business interests will be updated.

Other effects

Other impacts were taken into account and none were identified.

Monitoring and evaluation

The measure will be subject to ongoing review through information gathered through electronic submissions and through regular communication with affected taxpayer groups.

Additional tips

If you have any questions about this measure, please contact Jackie Phillips at [email protected]


The Rt Hon Lucy Frazer QC MP, Financial Secretary to the Treasury, has read this tax information and impact note and is satisfied that, given the available evidence, it represents a reasonable view of the likely costs, benefits and impacts of the measure.

Luisa D. Fuller