Thin capitalisation rules
(Matter raised by officials)
That an incorrect cross reference in section FE 41 to section FE 40 has resulted in an unintended change in legislation arising from the rewrite of the thin capitalisation provisions.
The issue arises from a submission to the Rewrite Advisory Panel that the association rule in section FE 41 should apply only to determine whether the thin capitalisation rules apply to companies with tiered ownership structures. The submission is that the effect of the current wording in section FE 41 results in the association rule applying for the whole of subpart FE rather than just section FE 41.
The Panel has recommended a retrospective remedial change to correct the drafting, but did not recommend a savings provision.
We agree with the Panel’s conclusions and recommendations.
That the submission be accepted.