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HMRC internal manual

Enquiry Manual

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HM Revenue & Customs
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Opening the Enquiry: Statute: CTSA Time Limits - Qualifying conditions to be a small group

Once you have identified the full extent of a group, see EM1512, you can consider whether that group is a small group for the purpose of the time limits for opening enquiries, see EM1510.

You need to check whether it meets the criteria below for being a small group.

There is guidance below on the practical approach to take.

 

Criteria for being a small group

A company is a member of a small group for an accounting period if

  • it is the parent’s company’s first financial year, the qualifying conditions are met in that year, or
  • in any of the parent company’s subsequent financial years

    • the qualifying conditions are met in that year and the preceding financial year, or
    • the qualifying conditions are met in that year and the group qualified as small in relation to the preceding financial year, or
    • the qualifying conditions were met in the preceding financial year and the group qualified as small in relation to that year.

Qualifying conditions

You must consider the qualifying conditions in connection with the criteria above for being a small group.

The qualifying conditions are that a group of companies must satisfy at least two of the following:

  • Aggregate turnover of not more than £6.5 million net (or £7.8 million gross)
  • Aggregate balance sheet total of not more than £3.26 million net (or £3.9 million gross)
  • Aggregate number of employees of not more than 50.

‘Net’ here means after any set-offs and other adjustments made to eliminate group transactions. ‘Gross’ means without those set-offs or adjustments.

The practical approach

A copy of the parent company’s consolidated accounts should demonstrate whether the qualifying conditions are met. If they are not available and you are not certain whether the company is a member of a group that is not small you should aim to reach a decision on whether to open an enquiry within a period of twelve months from the date of receipt of the return,

Even if you know that the company is a member of a group that is not small, where the returns for the whole group are received before the statutory filing date, you should aim to issue an enquiry notice within the period of 12 months from the date that the last return from the group was received, see EM1514.

CA2006/S383