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HMRC internal manual

Corporate Finance Manual

Debt cap: particular types of company: exemption for group treasury companies

Group treasury companies - election for exemption

Periods of account beginning before 11 December 2012

The exemption for group treasury companies in TIOPA10/PT7/S316 applies only where the company makes an election for amounts not to be treated as finance expense or finance income of the group treasury company. An election applies to a period of account of the worldwide group: a group treasury company that wants the exclusion to apply for successive periods of account must make an election for each period.

Where an election has been made, amounts that would otherwise be financing expense amounts of the period within TIOPA10/PT7/S313 are not financing expense amounts. Similarly, receipts that would otherwise fall within TIOPA10/PT7/S314 are not financing income amounts. This means that the company cannot have a net financing deduction, and no disallowance can be allocated to it under chapter 3. Nor can it have net financing income, and interest or similar income that it receives cannot be disregarded under chapter 4, or under the provisions relating to certain financing income from European Economic Area companies in chapter 5 (see CFM92800 onwards).

A group treasury company must make an election within three years after the end of the period of account concerned.

CFM92530 - CFM92540 explains what is meant by a ‘group treasury company’.

Periods of account beginning on or after 11 December 2012

For periods of account starting on or after 11 December 2012 there were two changes to the conditions.

First, to be a group treasury company, a company must have made an election for the relevant period. The election must be made within three years from the end of the period of account. This condition for a company being a group treasury company is in addition to the original three conditions described at CFM92530.

Second, if, having made an election, all or substantially all of a company’s activities are treasury activities and all or substantially all of its assets and liabilities relate to such activities, the company’s financing expenses and financing income are included in the election. See CFM92535.