The corporate interest restriction (CIR) is an annual cap on the amount of tax relief a company or group may claim for finance costs. Where CIR applies for a group, a reporting company should be appointed. The reporting company must submit interest restriction returns (IRRs). The IRRs must be submitted electronically using commercial software or HMRC’s online form. 

HMRC has found that reporting company appointments are often submitted late and do not contain all of the required information. This means the reporting company appointment is invalid. Also, where the reporting company has not been validly appointed, any IRRs submitted are invalid.

The following are also common errors reported by HMRC:

• the online form is not completed correctly (for example, the figure for qualifying net group-interest expense should not be larger than the figure for aggregated net group-interest expense). Figures in boxes should correspond to those in any supporting attachment;
• CIR groups with companies seeking to reactivate previously disallowed interest amounts have not submitted an IRR for the reactivation period as required. This means the reactivation is invalid;
• CIR groups seeking to apply the group ratio have not been appointed a reporting company and submitted an IRR. This means the application of the group ratio is invalid;
• errors are made in the calculations. These include:
  - failing to exclude exchange gains and losses adjustments from the calculation of tax-interest; and
  - not adjusting the calculation of tax-interest and tax- earnings before interest, tax, depreciation and amortisation where double taxation relief has been claimed; and
• companies are not disallowing their pro-rata share of the total CIR disallowance (using the fixed ratio method) where no IRR has been filed. 

ICAEW Tax Faculty published a TAXguide on CIR following its introduction in 2017 and amendments made in 2018. For HMRC guidance, see gov.uk.