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HMRC internal manual

Corporate Finance Manual

Debt cap: groups affected: 'large groups'

This guidance applies to worldwide group periods of account ending before or straddling 1 April 2017.

Debt cap does not apply where all group members are SMEs

To be a worldwide group and therefore within the debt cap rules a group must be large. TIOPA10/S344(1) defines a group as being large if any member of the group is not a micro, small or medium sized enterprise as defined in the Annex to European Commission Recommendation 2003/361/EC of 6 May 2003. This and a related User Guide are available on the EU website.

The definition applies to any entity engaged in an economic activity, irrespective of its legal form and includes entities subject to income tax as well as corporation tax. The definitions are summarised at CFM90230.

However, any group that contains one or more entities which are not micro, small or medium-sized entities will be within the debt cap rules, even if the most of the entities within the group are smaller.