The short answer
How Finance Act 2026 changed UK Corporate Interest Restriction reporting-company appointments, group authorisation, returns and the new penalty boundary.
The UK Corporate Interest Restriction (CIR) rules can limit the Corporation Tax deduction for a group’s net interest and financing costs. For accounting periods ending on or after 31 March 2026, Finance Act 2026 changed how groups appoint a reporting company and how the appointment is reflected in an Interest Restriction Return.
The change is operationally important for groups that already file CIR returns or may need to file one. A reporting-company appointment is no longer a once-and-forever administrative step: groups need to confirm the appointment for each relevant period, obtain the required level of group authorisation and make sure the return does not rely on an invalid appointment. The rules also change when a reporting company itself has a statutory obligation to file.
Check each accounting period
More than half the group must authorise
An invalid appointment can create a penalty
What is the Corporate Interest Restriction?
CIR is a group-level rule that can restrict the amount of interest and other financing costs deductible for Corporation Tax. The calculation can involve the group’s net tax-interest expense, the £2 million de minimis amount, the fixed-ratio or group-ratio method, interest capacity, disallowed amounts and elections. Those calculations are separate from the appointment mechanics discussed here.
If the group is required to submit an Interest Restriction Return, the return can allocate or carry forward interest restriction amounts and support claims or elections. A reporting company is the group company authorised to deal with the return process under the CIR rules. It does not mean that every company in the group is automatically subject to the same disallowance or that the appointed company is liable for all group Corporation Tax.
What changed from accounting periods ending on or after 31 March 2026?
HMRC’s updated Corporate Finance Manual describes several changes made by Finance Act 2026:
| Area | Post-change position to check |
|---|---|
| Time limit for appointment | The previous time limit for appointing a reporting company was removed. This does not remove the need for a valid appointment before relying on the return process. |
| Notice to HMRC | The appointment no longer depends on a separate notice in the former format; the appointment details are disclosed through the Interest Restriction Return process. |
| Group authorisation | The appointment must generally be authorised by more than 50% of the group for the relevant period. |
| Automatic rollover | A reporting-company appointment no longer automatically rolls into later periods. Recheck the authority for each period. |
| Retrospective appointment | In specified circumstances, the group or HMRC may be able to appoint retrospectively where an Interest Restriction Return was purportedly submitted. This is not a reason to skip the ordinary appointment process. |
| Filing obligation | The statutory obligation on the reporting company to file is removed except in limited circumstances, including where HMRC appoints a reporting or replacement reporting company. |
| Penalty | A £1,000 penalty may apply where a business has not validly appointed a reporting company before submitting an Interest Restriction Return, subject to the statutory safeguards. |
The exact commencement and transitional result depend on the accounting period. Do not apply the post-31 March 2026 rules to an earlier period without checking the applicable version of the legislation and HMRC manual.
A practical appointment and return workflow
CIR reporting-company review
- 1Identify the group and the accounting period. Record the period end and whether it ends on or after 31 March 2026.
- 2Check whether the group is within CIR and whether an Interest Restriction Return is required or useful. The £2 million de minimis and the group’s interest and financing-cost profile are calculation questions, not appointment shortcuts.
- 3Select the company that should act as reporting company and confirm it can obtain the relevant group authority and maintain the return records.
- 4Obtain authorisation from more than 50% of the group for the relevant period, retaining the resolutions, consents, ownership evidence and calculation of the voting or group percentage.
- 5Confirm that the appointment is recorded in the way required by the current return and software or online process. Do not rely on an old notice, a prior-period appointment or an automatically rolled-forward template.
- 6Before submission, check the appointment validity, return period, group membership, elections, allocated amounts and any previous disallowed-interest carry-forward.
A prior-period appointment is not enough
The post-31 March 2026 rules remove automatic rollover. Keep a period-by-period appointment record and confirm that the return identifies a valid reporting-company position for the period being filed.
What the new penalty boundary means
The penalty is linked to the validity of the reporting-company appointment before an Interest Restriction Return is submitted. It is not a flat penalty for every group with interest expense, and it does not replace the separate rules for late, inaccurate or incomplete returns.
Before filing, keep evidence showing:
- the group companies included for the relevant period;
- the identity of the proposed reporting company;
- how more than 50% authorisation was measured;
- the date and form of the authorisation;
- the accounting period to which the appointment relates;
- any prior appointment, revocation or HMRC appointment; and
- the return, elections and supporting calculations submitted.
If the group’s structure changes during or between periods, refresh the authorisation analysis. A new subsidiary, demerger, acquisition, change in ownership or different accounting period can affect which companies count and whether an earlier consent record still supports the current filing.
Reporting company versus group tax calculation
The reporting-company decision should not be confused with the underlying CIR calculation. Choosing a reporting company does not determine whether the group has excess interest, whether a fixed-ratio or group-ratio election is preferable, or how much interest is disallowed for each company.
Those questions require the group’s accounts, tax-interest amounts, related-party financing, public-benefit infrastructure-company position where relevant, elections and tax-interest capacity. Keep the appointment evidence separate from the calculation workpapers so that an otherwise correct computation is not undermined by an incomplete authorisation trail.
Return obligation and filing deadlines
The post-31 March 2026 rule separates appointment from the ordinary filing obligation. A company appointed by the group does not generally have a statutory duty to submit an Interest Restriction Return merely because it is the reporting company. The obligation remains where HMRC appoints a reporting company or a replacement reporting company in the circumstances covered by the legislation. This distinction affects the group's process design: the group may still choose to prepare and submit a return because it needs to allocate restrictions, make an election, carry forward capacity or preserve a claim, but the reason for filing should be recorded.
Where HMRC appoints the reporting company, HMRC's manual states that the return filing date is the later of 12 months after the end of the period of account or three months after the HMRC appointment. The return generally has no effect unless HMRC receives it before the later of 36 months after the period end or three months after the appointment, subject to special rules for closure notices, determinations and certain takeovers. Do not use the ordinary Corporation Tax return deadline as a substitute for the CIR-specific timetable.
The group's calendar should therefore show the accounting-period end, the date and type of appointment, the date the appointment was disclosed, the applicable filing date and the long-stop date for an effective return. A takeover can end an old group's period early and create apportionment work, while the former reporting company may retain responsibility for later revisions or enquiries relating to the old group. Escalate a group reorganisation before submitting a return based on an old template.
The £1,000 penalty and available safeguards
For a period ending on or after 31 March 2026, a company can face the £1,000 penalty if it purports to submit an Interest Restriction Return before being appointed as reporting company for that period. HMRC's manual describes safeguards that can remove the liability: the company may be appointed by the group up to the end of 18 months after the period of account; the company may notify HMRC without being prompted that it was not appointed when the return was submitted; or it may have a reasonable excuse and be appointed without unreasonable delay after the excuse ends.
These safeguards are not a filing strategy. Record the reason for the invalid appointment, the date HMRC or the group was notified, the date the appointment was corrected and any evidence supporting a reasonable excuse. HMRC must assess and notify the penalty within 12 months beginning with the day on which a company is subsequently appointed. The company can appeal by notice to HMRC within 30 days; if the penalty is upheld, payment is generally due within 30 days of notification or final determination of the appeal.
The appointment record should be reviewed before the return is uploaded, not after a penalty notice arrives. A signed group consent, a group-company list and a return acknowledgement are useful controls, but they do not replace checking the statutory majority and the period covered by the appointment.
Questions for an adviser or group tax team
Before treating the period as complete, ask:
- Is the group definition stable for the whole period, or did an acquisition, disposal or takeover end the group early?
- Is the group appointing the reporting company, or has HMRC made an appointment?
- Does the authorisation exceed 50% for this period, and is the calculation based on the correct group membership?
- Is an Interest Restriction Return being filed to make an election, allocate a restriction or preserve capacity, even if no statutory filing duty applies to a group-appointed company?
- Which filing date, long-stop date and correction period apply?
- Does any invalid-appointment safeguard or appeal deadline need to be recorded?
This checklist cannot calculate the group's interest restriction. It is a governance control designed to keep the appointment, return and penalty analysis aligned.
Frequently Asked Questions
Do reporting-company appointments still roll over automatically?
Is exactly 50% group approval enough?
Does every company with interest expense need a reporting company?
What is the £1,000 CIR penalty for?
Can an appointment be made retrospectively?
Does appointing a reporting company decide the amount of interest disallowed?
Which accounting periods are affected by the new reporting-company rule?
Does the reporting-company appointment remove the CIR filing requirement?
Is the £1,000 penalty the only CIR penalty?
For broader UK Corporation Tax changes, use the UK Corporation Tax changes guide. This page focuses on the post-31 March 2026 reporting-company and authorisation workflow; it is not a group-specific CIR calculation or professional advice.
Official sources
- GOV.UK: Restriction on Corporation Tax relief for interest deductions
- HMRC Corporate Finance Manual: appointment overview
- HMRC Corporate Finance Manual: post-31 March 2026 appointments
- HMRC Corporate Finance Manual: return obligation and time limits
- HMRC Corporate Finance Manual: invalid-appointment penalty
- UK Parliament: Finance Act 2026
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Review notes and assumptions
Reviewed
2026-09-22
Assumptions
- This guide reflects the Finance Act 2026 and HMRC guidance checked on 20 September 2026 for accounting periods ending on or after 31 March 2026.
- The group may be within the Corporate Interest Restriction rules; the guide does not calculate the group’s disallowance, £2 million threshold position or tax-interest capacity.
- A group’s legal entities, accounting periods, elections, reporting-company appointment and return history must be checked against the current legislation and HMRC guidance.