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HMRC internal manual

Corporate Finance Manual

Interest restriction: groups, periods and financial statements: the worldwide group: identity of the group


The composition of the worldwide group can change over time as companies both join and leave the group. The rules contain provision for this and determine the identity of the worldwide group by reference to the ultimate parent. This means that where the composition of the group changes, the identity of the group will be preserved as long as the ultimate parent remains the same.

Example 1

A Ltd is the ultimate parent of a group which, at the start of the year, contains A’s consolidated subsidiaries B Ltd, C Ltd and D Ltd. On 6 May, A Ltd disposes of its shares in C Ltd and on 28 August acquires all the shares of Z Ltd.

Throughout the year, there are therefore three different group compositions:

1 January - 6 May (A, B, C, D)

7 May - 28 August (A, B, D)

29 August - 31 December (A, B, D, Z)

Despite these different compositions, the ultimate parent (A) is consistent throughout meaning the worldwide group in the second and third periods is the same as the first.

Example 2

At the start of the year, the group is the same as in Example 1 and so consists of A, B, C and D. On 30 September, S Ltd acquires A Ltd and becomes the ultimate parent of a group which includes S, A, B, C and D.

The ultimate parent changes from A to S at 30 September and therefore the identity of the group changes with it. The worldwide group after 30 September is therefore not the same as the one before that date.