CFM95340 - Interest restriction: groups, periods and financial statements: the worldwide group: relevant entity
TIOPA10/S474
An entity can only be an ultimate parent if it is a relevant entity.
A relevant entity is:
- A company, or
- An entity whose shares, or other interests, are listed on a recognised stock exchange and sufficiently widely held.
Company
A company is defined for the Corporation Tax Acts by CTA2010/S1121 as any body corporate or unincorporated association, but does not include a partnership, local authority or a local authority association.
Sufficiently widely held
Shares, or other interests, which are listed on a recognised stock exchange will be sufficiently widely held where no participator in the entity holds more than 10% by value of all the shares or other interests.
Excluded entities
Certain entities are specifically excluded from being relevant entities. These are:
- The Crown
- A Minister of the Crown
- A government department
- A Northern Ireland department
- A foreign sovereign power
Example
Interests in a Limited Liability Partnership (Alpha LLP) are listed on the London Stock Exchange and are held by a number of participators. The interests have a total value of £100m. One participator holds £12m worth of the interests which equates to 12%. Alpha LLP is therefore incapable of being a relevant entity because it does not fall within the definition of a company and, although it is listed on a recognised stock exchange, one participator holds an interest that is over the 10% threshold.