24 January 2019 
Amanda Darley, Head of Operations and Engagement
PwC has provided us with the following update on CIR requirements, and details of what to do if you would like to revoke your university’s appointment of a reporting company for CIR (deadline to revoke: 31 January 2019).
When the CIR guidance was first produced the understanding was that all groups, including universities, were required to nominate a reporting company to make an annual CIR return, which the majority of universities followed. Where a university appointed a reporting company for CIR purposes strictly it had a filing obligation for the year ended 31 July 2017 even if, based on the updated guidance provided, it did not think the group was required to.
As previously advised, HMRC have suggested that if no restriction is expected by the university group, there is no requirement to nominate a reporting company.
Since last year’s initial discussions, HMRC have begun to review the potential problems created for HE and the charity sector more generally and there is now someone in their Treasury team looking at this.
The proposition PwC agreed with HMRC before last year's BUFDG tax conference was that if there was technically a need to make a CIR return but no consequence of making such a return (because any adjustment would be reflected in tax exempt income) HMRC would not insist that such returns were made. They would only follow up where there was a liability. HMRC has confirmed to PwC, and possibly to other advisers, that this remains the case.
However, HMRC have put a number of sector experts from leading firms in touch with one another and have asked them to discuss issues arising out of the legislation for charities, particularly in the HE and housing sectors. Among those issues is a proposal for a technical interpretation of the legislation which would mean that interest deducted in a primary purpose trade is not ‘tax interest’ for the purpose of the legislation. This would potentially solve the issue for universities. However, it's important to understand the implications this may have in other areas of tax and ensure that interpretation of this piece of legislation is consistent with the rest of tax law as it applies to charities so no unintended consequences arise. The sector experts have agreed to meet on 29 January.
The nomination lasts until the group formally revokes it. If the university group is comfortable that it does not have an obligation to file an interest restriction return in future, it may revoke its nominated company. NB: The deadline for the revocation in respect of the year ended 31 July 2018 is31 January 2019.
To make a revocation the university will need to notify HMRC that it wishes to revoke the appointment made previously under paragraph 1 TIOPA 2010 Sch7a. This must:
To notify, you should submit your notification online to HMRC. Making the revocation will not prevent you from nominating a company in the future.
Note that the university may like to continue making annual abbreviated returns in order to create the most flexibility in the future, even where it does not currently have an interest restriction. In which case, the university should not revoke its nominated company.
As a reminder, here is the CIR guidance provided by PwC in July 2018. If you have any questions please don't hesitate to contact either Lesley Graham or Elizabeth Aspinall-Johns of PwC (contact details in the guidance note).
We will update you with any changes as a result of the current discussions between professional advisers.
