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HMRC internal manual

Corporate Finance Manual

HM Revenue & Customs
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Debt cap: appointment of the authorised company: companies leaving and joining

Changes to the relevant group companies or UK group companies

The third circumstance where the appointment of an authorised company is revoked is when a company begins or ceases to be a relevant group company or a UK group company. So the companies responsible for appointing the authorised company have changed. Unless HMRC is notified as described below, the appointment ceases to have effect.

The appointment is not revoked if within three months of the change taking place the authorised company notifies the tax office that deals with its corporation tax affairs in writing of the change. The notification must also supply the name and tax office reference of the company that began or ceased to be a relevant group company or UK group company. And if a new company is a relevant group company or UK group company, the notification must be accompanied by a statement by that:

  • The company appointed under TIOPA10/S276 for allocated disallowances or S288 for allocated exemptions will act on its behalf for all relevant periods of account for which the appointment has effect;
  • Revisions to financing expense amounts or financing income amounts will only be made through a revised statement submitted by the authorised company; and
  • The new company agrees to be bound by any statement of allocated disallowances or allocated exemptions and any revised statement delivered by the applicant company.

Groups and HMRC officers should take a common-sense view of the application of this regulation where there is a major change in the structure of a group.

Example 1

The ultimate parent of a group of companies is a UK resident company. A new UK resident top company is put into place above this company, acquiring 100% of its share capital, and becoming the new ultimate parent. There are no other changes to the UK group structure.

Although this might be regarded as a ‘new’ group, a previous appointment of an authorised company will stand if, within three months of the change, the group notifies HMRC of the new top company. If the reconstituted group wishes to appoint a different authorised company, it may find it advisable to revoke the original appointment and substitute a new one.

Example 2

A worldwide group is headed by a US company, X Inc, which prepares accounts to 31 December. On 1 October 2012, X Inc and all of its subsidiaries are acquired by another US group. There are no changes to the UK group structure.

This major change means that the UK companies have become part of a different worldwide group - in particular, it will be necessary to look at a different set of consolidated accounts in determining the available amount before and after 1 October 2012. HMRC would not see this as triggering the revocation of an authorised company appointment, since no companies begin, or cease to be, relevant group companies or UK group companies. The change will, however, affect the time limits for submitting statements of allocated disallowances or allocated exemptions, since a period of account of the ‘old’ worldwide group will end on 30 September 2012, and a period of account of the ‘new’ group will begin on 1 October.

Example 3

A worldwide group is headed by a UK company, A. This merges with a second group, headed by a French company, B: this group has a number of UK subsidiaries. Both A and B groups have appointed authorised companies.

For the avoidance of doubt, the authorised companies for both the former A and B groups may wish to revoke their appointments by notice, with the merged group making a fresh application. If, however, no notices of revocation are given, the previous appointments will lapse, under Regulation 9(1) (for allocated disallowances) or Regulation 24(1) (allocated exemptions). It is not possible for the new group to say either that new companies have left B group and joined A group, or vice versa: these previous groups have ceased to exist.