Beta This part of GOV.UK is being rebuilt – find out what this means

HMRC internal manual

Corporate Finance Manual

From
HM Revenue & Customs
Updated
, see all updates

Loan relationships: tax avoidance: index-linked gilt-edged securities: the relevant group

The ‘relevant group’

As it is possible for two companies within the same group to undertake a relevant hedging scheme together (for example, company A holds the index-linked gilts and company B enters into a matching total return swap), CTA09/S400A applies to schemes that operate on a group basis as well as solo company schemes.

The ‘relevant group’ for the purposes of CTA09/S400A, is defined as company A and any other company which is both ‘associated with’ company A at any time in the accounting period and party to the same relevant hedging scheme.

‘Associated with’

CTA09/S400C sets out that a company is ‘associated with’ another company if any of the following 5 conditions are met:

Condition 1 - the ‘consolidation condition’

Company A and company B are associated with each other if the financial results of both companies are required to be consolidated into accounts prepared under section 399 of the Companies Act 2006 or, if they are not to be consolidated into such accounts, then this is due to the exemption at section 399(3).

Condition 2 - connected companies

Company A and company B are associated with each other if they are connected with each other as defined at CTA09/S466 (see CFM35110).

Condition 3 - major interest

Company A and company B are associated with each other if one of those companies has a ‘major interest’ in the other company. The meaning of ‘major interest’ is the same as that used for loan relationship purposes (see CFM35920).

Condition 4 - the ‘consolidation condition’ and a ‘major interest’

Company A and company B are associated with each other if company A and a third company meet the ‘consolidation condition’ (see condition 1 above) and that third company has a ‘major interest’ (see condition 3 above) in company B.

Condition 5 - a ‘major interest’ and connection

Company A and company B are associated with each other if company A and a third company are ‘connected’ (see condition 2 above) and that third company has a ‘major interest’ in company B (see condition 3 above).