That’s according to a submission made by the Northern Ireland Tax Committee in response to the Government’s consultation examining the deductibility of corporate interest.

As part of the BEPS project, the use of interest expense was identified as one of the key areas where there is a significant opportunity for BEPS by multinational companies. The OECD report under Action 4 of the BEPS project sets out recommendations for countering this. The UK government is thus reviewing the rules on interest deductibility that apply within the UK in light of the recommendations set out in the OECD report.

Key points of the submission include the following:

• The consultation proposals would add an additional layer of complexity to calculations of deductible interest, given the existence of a plethora of rules across UK tax legislation which already deal with this matter
• If a more general rule were to be introduced, this should include an exemption for small and medium sized enterprises (“SME”) in addition to grandfathering arrangements for existing debt. This SME carve out could be designed in the same way as the current SME exemption under transfer pricing legislation
• For those companies not meeting the SME exemption test, a deminimis exemption should be considered. This could be based on similar exclusions and carve outs provided for in the world wide debt cap legislation

The response is published on here.