INTM520120 - Thin capitalisation: practical guidance: creating agreements between HMRC and the group: example of an agreement: model ATCA - appendix 3 - short accounting period

HMRC has issued a model ATCA the body of which is at INTM520090. It is not intended for it to be followed slavishly, but it may serve as a template for many cases and as an aide memoire for the main features which HMRC is likely to expect to see in an agreement.

»Ê¹ÚÌåÓýapp model’s agreement’s third appendix is as follows:

Short Accounting Period

»Ê¹ÚÌåÓýapp calculation of the gearing ratio will need to take account of a short accounting period. This is done by increasing actual EBITDA for a short period pro rata in order to calculate an annual equivalent.

»Ê¹ÚÌåÓýapp interest cover calculation does not need to be similarly adjusted as the interest expense and EBITDA will both be calculated for the same period.