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HMRC internal manual

Banking Manual

Bank compensation restriction: definition of banking company: excluded companies - definition of a group for purpose of the excluded companies test


There are two parts of the excluded company tests that refer to the ‘group’ of which the company under consideration is a member:

  • CTA09/S133F(2)(b) in relation to companies carrying on regulated activities on behalf of insurance companies and insurance special purpose vehicles
  • CTA09/S133F(6) in relation to the definition of a linked entity for the purpose of determining if a company is carrying out asset management companies  

The group definition used is an accounting definition (CTA09/S269BD). A group comprises the parent company and all members of the group that are included in the consolidated financial statements at the time they are drawn up under International Accounting Standards (IAS) or UK GAAP.

Consolidated financial statements drawn up under US GAAP can be used to determine the members of the relevant group provided each of the following conditions is met:

  • the parent is not resident in the UK
  • US GAAP is a generally accepted basis of preparation for financial statements for an entity resident in the territory of the parent entity
  • the parent entity prepares consolidated financial statements under US GAAP