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HMRC internal manual

Senior Accounting Officer Guidance

From
HM Revenue & Customs
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What is a qualifying company: conditions for a qualifying company: company leaves and joins another group

Company leaves a group and joins another group

For the year in which the company leaves the old group the situation will be as described in SAOG11310. Whether it is a qualifying company or not in the year of departure depends on the financial conditions at the end of the preceding financial year.

For the year after that in which it joins the new group, the company will need to aggregate its turnover and/or balance sheets totals with those of the other UK companies in the new group.

Example

Company B has financial years that end on 31 December. It has been part of a group of companies for many years. Its own turnover and balance sheet totals have been consistently modest and do not reach the qualifying company limits for these items. However, the aggregate turnover and/or balance sheet total of the UK companies within the group has been such that Company B has been a qualifying company.

Company B leaves the old group on 31 March 2014 and joins a new group on the same day. In determining whether it is a qualifying company for its financial year to 31 December 2014, its responsible officers must consider

  • its UK incorporation for the year ended 31 December 2014 and
  • its turnover and/or balance sheet total for the year ended 31 December 2013.

At the end of the year ended 31 December 2013 Company B was a member of the old group. So the turnover and/or balance sheet total to be considered is the aggregate of all the UK companies within the old group.

In the year ended 31 December 2015, the responsible officers of Company B must again determine whether it is a qualifying company. For this year, they must consider the turnover and/or balance sheet total for the financial year ended 31 December 2014. At the end of that financial year Company B was a member of the new group. So the turnover and/or balance sheet total they must consider is the aggregate of all the UK companies within the new group.

FA09/SCH46/PARA15(4)