Corporation Tax Citation, commencement, effect and interpretation 1 1 These Regulations may be cited as the Corporate Interest Restriction (Financial Statements: Group Mismatches) Regulations 2017 and come into force on 29th December 2017. 2 The Regulations have effect for periods of account of a worldwide group that begin on or after 1 April 2017. 3 For the purposes of these Regulations, “the specified amounts” means— a the net group-interest expense , b the adjusted net group-interest expense , c the qualifying net group-interest expense , and d the group-EBITDA . Loan relationship accounted for at fair value 2 1 This regulation applies where on 1 April 2017 a company is a party to a loan relationship which is dealt with— a in the company’s accounts on an amortised cost basis of accounting, and b in the financial statements of the worldwide group of which the company is a member— i on the basis of fair value accounting , or ii as a hedged item in a designated fair value hedge where the carrying value of the hedged item is adjusted for changes in fair value attributable to the hedged risk. 2 For the purpose of calculating the specified amounts, the financial statements of the worldwide group are treated, in relation to the loan relationship, as having been drawn up on an amortised cost basis of accounting. 3 In this regulation, “amortised cost basis of accounting”, in relation to a company’s loan relationship, means a basis of accounting under which an asset or liability representing the loan relationship is measured in the company’s balance sheet at its amortised cost using the effective interest method. 4 In paragraph (3), “effective interest method” has the meaning given by international accounting standards. Debt buy-back 3 1 This regulation applies where— a on 1 April 2017 a loan relationship exists between two companies which are members of the same worldwide group, b the loan was previously recognised in the financial statements of the worldwide group, c the loan was derecognised in the financial statements of the worldwide group when— i a company in the worldwide group became party as creditor to the loan relationship, or ii the company which is party to the loan relationship as creditor became a member of the worldwide group, and neither section 361 or 362 of the Corporation Tax Act 2009 applied on the occasion of either of those events, and d a gain or loss was recognised in the financial statements of the worldwide group in respect of the derecognition. 2 For the purpose of calculating the specified amounts, an amount equal to the gain or loss recognised in the financial statements of the worldwide group in respect of the derecognition is treated as brought into account on a just and reasonable basis over the remainder of the term of the loan. Employer asset-backed pension contribution 4 1 This regulation applies where in relation to a company which is a member of a worldwide group, a finance charge arises in respect of a finance arrangement which would be an acceptable structured finance arrangement in connection with a contribution paid by an employer under a registered pension scheme in respect of which the employer is entitled to relief under Chapter 4 of Part 4 of the Finance Act 2004 and that finance charge— a is treated as interest payable under a transaction or a loan relationship under any of the following provisions of the Corporation Tax Act 2010 — i section 761(3) (deemed loan relationship if borrower is a company), ii section 762(3) (deemed loan relationship if borrower is a partnership with corporate member), iii section 766(3) (deemed loan relationship), or iv section 769(3) (deemed loan relationship), b is a tax-interest expense amount of the company, and c is not recognised as a relevant expense amount in the financial statements of the worldwide group. 2 For the purpose of calculating the specified amounts, an amount equal to the finance charge is treated as brought into account as if it were a relevant expense amount recognised in the financial statements of the worldwide group. 3 In paragraph (1), “acceptable structured finance arrangement” has the meaning given in section 196C (employer asset-backed contributions: “acceptable structured finance arrangement” (1)), section 196E (employer asset-backed contributions: “acceptable structured finance arrangement” (2)) or section 196G (employer asset-backed contributions: “acceptable structured finance arrangement” (3)) of the Finance Act 2004 , as the case may be. Justin Holliday Nick Lodge Two of the Commissioners for Her Majesty’s Revenue and Customs 7th December 2017