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HMRC internal manual

Corporate Finance Manual

Debt cap: gateway test: group does not prepare consolidated financial statements

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

Where no consolidated financial statements are prepared by the group the gateway test is applied as if such statements had been prepared in accordance with IAS.

Some groups do not draw up consolidated financial statements. In this situation, TIOPA10/S348 applies.

These rules, explained in more detail at CFM90460, state that TIOPA10/Part 7 applies as if consolidated financial statements had been prepared in accordance with IAS and sets out the rules to establish the period of account of the worldwide group.

As with the application of TIOPA10/S348 to the main set of rules, the group is not expected in these cases to prepare a fully audited set of consolidated financial statements.

Rather the group is expected to provide the figures that would be included in acceptable consolidated financial statements if such statements were prepared.

In the case of a business combination between two groups or a de-merger, section 348 does not apply, instead new rules were introduced by FA12 - see CFM90480.