Basic Rule
TIOPA 2010 section 373 (3). The interest reactivation cap is: the the interest allowance of the group for the period less the net tax interest expense of the period. (If the result is negative the interest reactivation cap is 0).
373(6) A worldwide group is subject to interest reactivations if the interest reactivation cap is not nil and one member of the group is with the charge to corporation tax and has an amount available for reactivation in the return period.
Other rules
The amount available for reactivation by a company is defined in paragraph 26 of TIOPA 2010 schedule 7A. Point to note the is at a company level but generally the legislation works at a group level.
But full interest restriction returns must be submitted for the reactivation to take place.
To calculate the interest reactivation cap it is necessary to calculate the interest allowance for the period. This is defined in TIOPA 2010 section 396 as the sum of the the basic interest allowance (i.e. the EBITDA multiplied by 30% or the group ratio bit) plus the net tax interest income of the group.
